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Introduction Accounting Theory

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Introduction:
Conflict occurs between people in all kinds of human relationships and in all social settings. Because of the wide range of potential differences among people, the absence of conflict usually signals the absence of meaningful interaction. Conflict by itself is neither good nor bad. However, the manner in which conflict is handled determines whether it is constructive or destructive (Deutsch & Coleman, 2000). Conflict is defined as an incompatibility of goals or values between two or more parties in a relationship, combined with attempts to control each other and antagonistic feelings toward each other (Fisher, 1990). The incompatibility or difference may exist in reality or may only be perceived by the parties involved. Nonetheless, the opposing actions and the hostile emotions are very real hallmarks of human conflict. Conflict has the potential for either a great deal of destruction or much creativity and positive social change (Kriesberg, 1998). Therefore, it is essential to understand the basic processes of conflict so that we can work to maximize productive outcomes and minimize destructive ones. This paper will briefly describe some common sources of conflict, the levels of social interaction at which conflict occurs, and the general strategies of approaching conflict that are available.
There is an old Chinese curse which states, "I curse you--may I you live in an important age." Indeed, we do live in an important age, saturated with many forms and intensities of conflict. While conflicts of value are slow to erupt between individuals and institutions in a stable society, they are prevalent in times of rapid change. In our age of dynamic change it is imperative that the manager understand the source of; and various strategies for dealing with, conflict which inevitably occurs in organizations. Typical of this conflict is the breakdown of communication between management and labor; between a commander and his troops; or between a secretary and her supervisor. Even more common, perhaps, is the overt and often hostile dysfunctional competition that erupts between work centers, peers,or social groups vying for scarce resources or attention.
In our discovery of conflict, it is possible to become obsessed and preoccupied with its prevalence in society. This concern may veil the much more important acts of cooperation andharmony that characterize normal organizational and society life; like that which we expect and usually find, for example, between maintenance and operations in an Air Force wing. However, as a basis for our discussion, we must agree that conflict is a major organizational reality. As managers it is essential that we become capable of managing conflict in an environment of individual and group differences.
So, what do we mean by "conflict"? The term is widely used to describe important differences between individual humans or groups of humans. In its major sense it applies to warfare between nations. If existing differences are not somehow adequately handled, the involved individuals or groups are unable to come together in understanding and cooperation. However, not all conflict is bad. Differences which result in initiative and creativity are stimulating for those involved, and such conflict is essential for progress.

Sources of Conflict:
Early reviews in the field of conflict resolution identified a large number of schemes for describing sources or types of conflict (Fink, 1968; Mack & Snyder, 1958). One of the early theorists on conflict, Daniel Katz (1965), created a typology that distinguishes three main sources of conflict: economic, value, and power.

1. Economic conflict involves competing motives to attain scarce resources. Each party wants to get the most that it can, and the behavior and emotions of each party are directed toward maximizing its gain. Union and management conflict often has as one of its sources the incompatible goals of how to slice up the “economic pie”.

2. Value conflict involves incompatibility in ways of life, ideologies – the preferences, principles and practices that people believe in. International conflict (e.g., the Cold War) often has a strong value component, wherein each side asserts the rightness and superiority of its way of life and its political-economic system.
3. Power conflict occurs when each party wishes to maintain or maximize the amount of influence that it exerts in the relationship and the social setting. It is impossible for one party to be stronger without the other being weaker, at least in terms of direct influence over each other. Thus, a power struggle ensues which usually ends in a victory and defeat, or in a “stand-off” with a continuing state of tension. Power conflicts can occur between individuals, between groups or between nations, whenever one or both parties choose to take a power approach to the relationship. Power also enters into all conflict since the parties are attempting to control each other. It must be noted that most conflicts are not of a pure type, but involve a mixture of sources. For example, union-management conflict typically involves economic competition, but may also take the form of a power struggle and often involves different ideologies or political values. The more sources that are involved, the more intense and intractable the conflict usually is. Another important source of conflict is ineffective communication. Miscommunication and misunderstanding can create conflict even where there are no basic incompatibilities. In addition, parties may have different perceptions as to what are the facts in a situation, and until they share information and clarify their perceptions, resolution is impossible. Self-centeredness, selective perception, emotional bias, prejudices, etc., are all forces that lead us to perceive situations very differently from the other party. Lack of skill in communicating what we really mean in a clear and respectful fashion often results in confusion, hurt and anger, all of which simply feed the conflict process. Whether the conflict has objective sources or is due only to perceptual or communication problems, it is experienced as very real by the parties involved.

Escalation of Conflict:
A final source of conflict is more additional than basic, that is, it comes in after the conflict has started. Conflicts have a definite tendency to escalate, i.e., to become more intense and hostile, and to develop more issues, i.e., what the parties say the conflict is about. Therefore, escalating conflicts become more difficult to manage. The process of escalation feeds on fear and defensiveness. Threat leads to counter threat, usually with higher stakes at each go-round. Selective and distorted perception justifies a competitive and cautious approach as opposed to a trusting and cooperative one. Through Deutsch’s crude law of social relations (1973), competition breeds competition, rather than cooperation. The self-fulfilling prophecy comes into play. Each party believes in the evil intentions of the other and the inevitability of disagreement, and therefore takes precautionary actions which signal mistrust and competitiveness (Blake, Shepard & Mouton, 1964). When the other party then responds with a counteraction, this is perceived as justifying the initial precautionary measure, and a new spiral of action and counteraction begins. Through the norm of reciprocity, stronger attempts to control are met not only with stronger resistance, but more contentious attempts to gain the upper hand. With each succeeding spiral of conflict, polarization grows and the parties become more adamant and intransigent in their approach to the situation. Even though the intensity of the conflict may moderate for periods of time, the issues remain, and a triggering event induces conflictual behavior with negative consequences, and the conflict has moved one more step up the escalation staircase. When parties become “locked in” to a conflict they are usually unable to get out by themselves, and the intervention of a third party in the role of arbitrator, mediator or consultant may be required (Fisher, 1972, 1997).

Levels of Conflict:
Conflict can occur at a number of levels of human functioning. Conflict in your head between opposing motives or ideas is shown by your “internal dialogue” and is at the intrapersonal level. Beyond that, the primary concern here is with social conflict, i.e., conflict between people whether they are acting as individuals, as members of groups, or as representatives of organizations or nations.

Interpersonal conflict occurs when two people have incompatible needs, goals, or approaches in their relationship. Communication breakdown is often an important source of interpersonal conflict and learning communication skills is valuable in preventing and resolving such difficulties. At the same time, very real differences occur between people that cannot be resolved by any amount of improved communication. “Personality conflict” refers to very strong differences in motives, values or styles in dealing with people that are not resolvable. For example, if both parties in a relationship have a high need for power and both want to be dominant in the relationship, there is no way for both to be satisfied, and a power struggle ensues. Common tactics used in interpersonal power struggles include the exaggerated use of rewards and punishments, deception and evasion, threats and emotional blackmail, and flattery or ingratiation. Unresolved power conflict usually recycles and escalates to the point of relationship breakdown and termination.

Role conflict involves very real differences in role definitions, expectations or responsibilities between individuals who are interdependent in a social system. If there are ambiguities in role definitions in an organization or unclear boundaries of responsibilities, then the stage is set for interpersonal friction between the persons involved. Unfortunately, the conflict is often misdiagnosed as interpersonal conflict rather than role conflict, and resolution is then complicated and misdirected. The emotional intensity is often quite high in role conflict since people are directly involved as individuals and there is a strong tendency to personalize the conflict.

Intergroup conflict occurs between collections of people such as ethnic or racial groups, departments or levels of decision making in the same organization, and union and management. Competition for scarce resources is a common source of intergroup conflict, and societies have developed numerous regulatory mechanisms, such as collective bargaining and mediation, for dealing with intergroup conflict in less disruptive ways. Social-psychological processes are very important in intergroup conflict (Fisher, 1990). Group members tend to develop stereotypes (oversimplified negative beliefs) of the opposing group, tend to blame them for their own problems (scapegoating), and practice discrimination against them. These classic symptoms of intergroup conflict can be just as evident in organizations as in race relations in community settings. Intergroup conflict is especially tense and prone to escalation and intractability when group identities are threatened. The costs of destructive intergroup conflict can be extremely high for a society in both economic and social terms.

Multi-Party Conflict occurs in societies when different interest groups and organizations have varying priorities over resource management and policy development. These complex conflicts typically involve a combination of economic, value and power sources. This complexity is often beyond the reach of traditional authoritative or adversarial procedures, and more collaborative approaches to building consensus are required for resolution (Cormick et al, 1996; Gray, 1989).

International conflict occurs between states at the global level. Competition for resources certainly plays a part, but value and power conflict are often intertwined and sometimes predominate. The differences are articulated through the channels of diplomacy in a constant game of give and take, or threat and counterthreat, sometimes for the highest of stakes. Mechanisms of propaganda can lead to many of the same social-psychological distortions that characterize interpersonal and intergroup conflict.

Methods of Conflict Resolution:
Regardless of the level of conflict, there are differing approaches to deal with the incompatibilities that exist. Conflict can result in destructive outcomes or creative ones depending on the approach that is taken. If we can manage conflict creatively, we can often find new solutions that are mutually satisfactory to both parties. Sometimes this will involve a distribution of resources or power that is more equitable than before, or in creating a larger pool of resources or forms of influence than before. Creative outcomes are more probable when the parties are interdependent, i.e., each having some degree of independence and autonomy from which to influence the other, rather than one party being primarily dependent on the other. Given interdependence, three general strategies have been identified that the parties may take toward dealing with their conflict; win-lose, lose-lose, and win-win (Blake, Shepard & Mouton, 1964).
The win-lose approach is all too common. People learn the behaviors of destructive conflict early in life – competition, dominance, aggression and defense permeate many of our social relationships from the family to the school playground. The “fixed pie” assumption is made, often incorrectly, that what one party gains, the other loses. The strategy is thus to force the other side to capitulate. Sometimes, this is done through socially acceptable mechanisms such as majority vote, the authority of the leader, or the determination of a judge. Sometimes, it involves secret strategies, threat, innuendo – whatever works is acceptable, i.e., the ends justify the means. There is often a strong we-they distinction accompanied by the classic symptoms of intergroup conflict. The valued outcome is to have a victor who is superior, and a vanquished who withdraws in shame, but who prepares very carefully for the next round. In the long run, everyone loses.
The lose-lose strategy is exemplified by smoothing over conflict or by reaching the simplest of compromises. In neither case is the creative potential of productive conflict resolution realized or explored. Disagreement is seen as inevitable, so therefore why not split the difference or smooth over difficulties in as painless a way as possible? Sometimes, this is indeed the reality of the situation, and the costs are less than in the win-lose approach, at least for the loser. Each party gets some of what it wants, and resigns itself to partial satisfaction. Neither side is aware that by confronting the conflict fully and cooperatively they might have created a more satisfying solution. Or the parties may realistically use this approach to divide limited resources or to forestall a win-lose escalation and outcome.
The win-win approach is a conscious and systematic attempt to maximize the goals of both parties through collaborative problem solving. The conflict is seen as a problem to be solved rather than a war to be won. The important distinction is we (both parties) versus the problem, rather than we (one party) versus they (the other party). This method focuses on the needs and constraints of both parties rather than emphasizing strategies designed to conquer. Full problem definition and analysis and development of alternatives precedes consensus decisions on mutually agreeable solutions. The parties work toward common and superordinate goals, i.e., ones that can only be attained by both parties pulling together. There is an emphasis on the quality of the long term relationships between the parties, rather than short term accommodations. Communication is open and direct rather than secretive and calculating. Threat and coercion are proscribed. The assumption is made that integrative agreements are possible given the full range of resources existing in the relationship. Attitudes and behaviors are directed toward an increase of trust and acceptance rather than an escalation of suspicion and hostility. The win-win approach requires a very high degree of patience and skill in human relations and problem solving.

means to stimulate conflict
All conflict is not bad. Therefore, there will be times when a manager would want conflict (of the right type), and it would be advantageous for him to know some means of stimulation. In a number of instances, he could strive to create the situations he earlier worked to eliminate. For example, he might create win-lose situations in which a form of competitiveness might be engendered. This often works in such areas as selling an idea recognizing the creation of new approaches to organizational success, etc. A means to do this is to de-emphasize the need for everyone to contribute to overall organizational success. That is, the manager begins to emphasize the accomplishments or performance of individual people, or separate units, in lieu of stressing the performance of the whole. He must be cautious, though, avoid creating a monster that becomes an even greater problem than the absence of productive conflict.
Individuals are the creative segments of society. True, the synergism of two more individuals often makes us think of organizational creativity, but it really is the individual who creates. Therefore, stimulation of creative conflict canbe obtained by increasing the autonomy of individuals on their jobs. A less demanding imposed structure, granting more freedom for the individual to choose and decide for himself, usually creates an environment in which the creative nature is fanned to flame. Similarly, a decrease in supervisory overhead (a widening of the organization) can accomplish this result. Again, though, the manager must be cautious and remain in control of thesituation lestit get out of hand. It is sometimes easy to forget the real goals of the organization as we get enmeshed in the thrill of innovation.
Another means of stimulation is to declarify goals. That is, redefined them in such a manner as to create questions and discussion. The cautions already stated apply, but this device can serve many useful purposes. A principal gain can be the encouragement of challenge and question for all operating segments, policies, and procedures of the organization. When people begin to question what they are doing, how they are doing it, or whythey are doing it, new ideas and approaches begin to surface. So encourage questioning and challenge the existing as a method of stimulating desired differences of thought. The "rebel," the individual who does not blindly accept what already exists, can be such a stimulant. He or she can be discomforting, but energizing, as each asks those questions that the old hands and the managers cannot readily answer with convincing logic. A planted rebel can be a stimulating device if the organizational element in which he is placed is strong enough to handle the turbulence likely to follow.
Conflict is a state of unresolved difference between two entities, human or organization. Sometimes the difference is functionally productive, as with creativity; but sometimes it is dysfunctional, as with war or sabotage or less drastic results. Conflict should not, therefore, be naturally considered either bad or good. It will be bad or good depending upon the value base of the interpreter. But conflict of some form is inevitable whenever two or more humans are in some interdependent relationship. The important aspect of conflict is how the human participants relate and respond to it. Managers must controlconflict. That is, they must keep dysfunctional conflict at an acceptable level, but, also, they must learn to stimulate functionally productive conflict when it is at too low level.

Conclusion:
Conflict is an inevitable fact of human existence. If we work to understand and manage it effectively, we can improve both the satisfaction and productivity of our social relationships.
Conflicts are part of human nature and it is ex¬tremely important to study it not only for theoretical purposes but also for or¬ganizational practice. Paw¬lak (1998) suggests that conflict analysis and its resolutions has an impor¬tant role in private, public and political organizations, as well as in judicial and work disputes, in military operations and many other situations.
Traditionally in marketing a great deal of attention is devot¬ed to the consumer rather than to organizational issues (Jung 2003). However, this doesn’t seem to be the more appropriate approach because the attention to one aspect doesn’t eliminate or minimize the importance of the other one. The understand¬ing of organizational environment and the relationship between the organization’s members is vital for the effective functioning of the areas, including marketing. Therefore, marketing studies that already enhance conflicts in distribution channels should also investigate conflicts that take place within organizations. According to field survey results, special emphasis should be given to communication problems, different expectations and problems with organizational structure. Internal conflicts that break out within the marketing area and within related areas such as sales should also be given attention.
Conflict resolution depends on a lot of factors such as types of companies, personalities of individuals and culture of an or¬ganization. The influence of all these factors turns the manage-ment of this phenomenon still more complex. For this reason it is recommended to organizations to follow-up group inter¬actions and activities so as to ensure a degree of functionality compatible to conflicts. Positive conflicts will only be possible if particularities of the organization are analyzed. This involves an awareness of the employees’ profile, as well as of the relationship between departments and hierarchical levels and of the rules shared that guide behavior.
Despite being exploratory, this re¬search reveals situations and conflict trends, providing reflections on how to deal with this issue. New ideas can emerge from this article and may ad-dress organizational conflict in a more specific and deep way. In future articles, conflicts should be explored, for in¬stance, in terms of styles, consequences and occurrences in distinct functional areas and across different cultures and countries.

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...How would critical theorists assess research based on the Positive Accounting Theory? Accounting researchers tend to accept current accounting systems. Rather than focusing on why accounting systems favour certain classes of society, research is mainly carried out to such things as what accounting methods are most appropriate in certain circumstances, what motivates managers to use one accounting method over another and disclosure. By looking at accounting with a critical perspective is to recognise the way in which people are in control of capital. The Positive Accounting Theory (PAT) and Legitimacy Theory can be analysed critically for their bias approach of a political and economic perspective disregarding those people without wealth. A critical perspective of accounting is a perspective that critically evaluates the role of accounting in society. It does not consider issues such as what accounting methods should be used in which situations and often views accounting as a major contributor to perceived social problems and inequalities (Deegan, 2001). Critical theorists are those that ignore the whole world of accounting, favouring the interests of those people with wealth of power. However, they focus on the problems in and of society, not debate which methods of accounting should be employed. Accounting to Watts & Zimmerman (1990, page 7) Positive Accounting Theory is concerned with explaining accounting practice. It is designed to explain and predict which firms......

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Accounting Theory

...1. Introduction Accounting practices have been argued to reflect information quality of the firm in the market. Recently, there has been renewed interest in the relation between information asymmetry and conservative financial reporting practices. Many theorists have critiqued this aspect of information asymmetry, which has garnered significant interest in the accounting arena in the world today. This paper is set out to analyze the literature on conservative financial reporting, dissecting Akerlof’s article surrounding information asymmetry. Following this, possible motivations by firms to undertake these accounting measures will be meted out, coupled with an examination of the empirical evidence in reflection of the measurement of conservatism, with a final conclusion pertaining the relationship of information quality and financial reporting choices being ascertained. 2. Conservative Financial Reporting Conservatism is the differential verifiability required for the recognition of accounting gains versus losses that generates an understatement of net assets. (Basu, 1997) There has been evidence strongly suggesting that U.S companies had used conservative financial reporting practices since the last five decades. (Watts, 2003) It is argued that conservatism of financial reporting arises because of information asymmetry between firm managers and shareholders. While information asymmetry refers to a situation where one party has more or superior information compared to......

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An Introduction to Accounting

...An Introduction to Accounting The biggest part of a business is the role of financial accounting. It has individuals, businesses and nonprofit organizations when recording the financial transactions, preparing reports that reflects performance and current financial positions, and when making important decisions about users. There are different types of business structures, such as proprietorship and partnership. a proprietor is the sole owner and a partnership is having multiple owners. Proprietors are solely responsible for success and failure of the company, while partnership is distributed amongst them. There is also a corporation which is owned by stockholders. Each is different but still follows the same set of guidelines set by the Financial Accounting Standards Board (FASB). The FASB is an organization that created the outline of available sources for the generally accepted accounting principles (GGAP) (Keiso et al., 2007, p. 12). The outline is based on a hierarchy, determining how accountants would proceed in recording and preparing the company’s financial statements. The top of the hierarchy has the FASB’s statements and The American Institute of Certified Public Accountants’ (AICPA) opinions. The bottom consists of the FASB’s questions and answers and interpretations from AICPA. Top sources come first then down the hierarchy if there are no pronouncements at the top level (Keiso et al., 2007, p. 13). Accountants are a vital part of companies since they......

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