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Developing Conceptual Frameworks Are a Time Wasting Activity

The financial accounting theory functions on the basis of conceptual framework, explains the observed accounting practices and predicts the unobserved practices. The theoretical framework of accounting evolved significantly in the 20th century following the market crash in 1929 and recent financial crisis. The major accounting theories, developed in 20th century are Efficient Market Hypothesis (EMH), fundamental analysis model, CAPM, positive accounting theory and critical perspective model. These theories were criticised by SATTA (Statement of Accounting Theory amp. Theory Acceptance) giving the reasons why these theories could not gain general acceptance. The main points of criticism were real world complexity, varying requirements of user groups, and failed interpretation of security price behaviour through EMH, costs of adopting accounting standards more than the benefits and limited capacity of users in assimilation and analysis of accounting information. Further, to understand the implications of conceptual framework example of the joint project of IASB and FASB for the convergence of their respective conceptual frameworks is discussed. … Conceptual Framework A conceptual framework explains the key factors, variables or constructs and their presumed interrelationships either in a narrative form or graphic form (Miles amp. Huberman, 1999, p.18). It is primarily a model or conception of what is meant to be studied i.e. the system of assumptions, concept, beliefs, expectations and theories. Its function is to help assess the goals, develop relevant and realistic research questions, select apt methods and identify the validity threats to the conclusion. The conceptual framework also helps in justifying the research. It is like a tentative theory which may or may not be complete. In order to construct a conceptual framework of a study the sources which can be used are: experiential knowledge, existing research and theory, exploratory research and thought experiments (Maxwell, 2005, p.33-37). The experiential knowledge is the most important and neglected source for conceptual framework and bringing it in the research is treated as bias whereas Peshkin (1988) has strongly argued that the researchers should seek subjectivity in a systematic manner rather than in retrospective manner when the data collection and analysis is complete (Peshkin, 1988, p.17). A belief is a subjective condition of knowledge. For example in order to know a proposition ā€˜Pā€™, one has to believe ā€˜Pā€™ (Hospers, 1997, p.40).

Developing Conceptual Frameworks Are a Time Wasting Activity