Wherefore Accounting Data--Explanation, Prediction and Decisions.

Abstract The underlying structure of explanation, prediction and decision making has been examined. A divergence was noted which resulted in conceptual differences among the three notions, including deductive-nomological and statistical forms of causal explanation and causal and coincidental forms of prediction. Nevertheless, all five concepts converge in terms of basic structure which consists of universal generalizations and empirical statements asserting the existence of the antecedent conditions contained in the generalizations. The consequent event is logically deducible from this explanans. The general format may be expressed in symbolic terms as: ... The relationship of accountancy to this model was observed with the conclusion that accounting data may provide the empirical statements contained in the explanans of the nonaccounting models. For analytical purposes, four areas of concern were identified: 1. The definition of predicates contained in all models 2. The confirmation of the generalizations contained in accounting theory 3. The confirmation of the generalizations contained in the nonaccounting theory 4. The accuracy of the interface between the accounting and non-accounting models. To paraphrase Nietzsche once again, what does not destroy accounting theory will make it stronger. The foregoing discussion should help to make accounting theory a larger and clearer target for critical analysis.