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...... In 1916, academicians formed their own group called the Accounting Academicians, concurrently with the American Economic Association. Practitioners belonged to the American Association of Public Accountants; while academicians felt more comfortable with other faculty; this organization later became known as the American Accounting Association (Mitchell, 2005). Positive accounting theory has been traced back to the research conducted by Watts and Zimmerman (1978), which provided the theoretical basis for a number of social disclosure studies. Research by Watts and Zimmerman (1978) concluded that individuals acted to maximize their own utility, and that managers have greater incentives to choose accounting standards which report lower earnings, thereby increasing cash flows, firm value, and their welfare. Watts and Zimmermans research was based on three main hypotheses: 1) Managers of firms with bonus plans are more likely to choose accounting procedures that shift reported earnings from future periods to the current period, 2) The larger a firms debut/equity ratio, the more likely the firms manager is to select accounting procedures that shift reported earnings from future periods to the current period, and 3) The larger the firm, the more likely the manager is to choose accounting procedures that defer reported earnings from current o

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