ACCOUNTING METHOD CHOICE - OPPORTUNISTIC BEHAVIOR, EFFICIENT CONTRACTING, AND INFORMATION PERSPECTIVES

Three alternative, but not mutually exclusive, perspectives on accounting method choice are contrasted: the opportunistic behavior, efficient contracting, and information perspectives. Much of the empirical work on accounting method choice is based on the opportunistic behavior perspective. The Malmquist and Main and Smith papers are attempts to view accounting method choice as a means of improving the monitoring capabilities of contracts which rely on accounting numbers. The papers serve as useful vehicles for illustrating the difficulties of delineating a set of maintained assumptions that result in hypotheses about how accounting method choice affects the monitoring characteristics of contracts, and distinguishing between hypotheses based on the three perspectives on accounting method choice. © 1990.