Determinants of Different Accounting Methods Choice in Tanzania: A Positive Accounting Theory Approach

1.0 Introduction and motivation The purpose of this study is to investigate the factors which influence the choices of accounting policies by managers of companies in Tanzania. Previous studies show that managers may choose income increasing or income decreasing accounting policies in reporting financial results (Beattie et al., 1994; Astami & Tower, 2006; Bowen & Shores, 1995).These studies also examine a number of factors that influence the managers’ incentives for accounting choice. However, there are reasons to suggest that more research is required. First, most of these studies have tended to focus on firms in the developed countries (see Inoue & Thomas, 1996; Cullinan, 1999; Lin & Peasnell, 2000) and in countries in the AsiaPacific region (Rahman & Scapens, 1988; Tawfik &, 2006; Astami & Tower, 2009). Consequently, there are no studies that have examined managerial accounting methods choices in the context of Africa. The findings from developed countries and the Asia-Pacific region may not be relevant to Africa because the environment is different, for example, the stage of economic development is very low, financial markets are inefficient and underdeveloped, and regulatory framework for accounting is weak and compliance with accounting rules is low (see Okeahalam, 2004). This study is the first attempt to examine what motivates managers to choose one accounting method over another in an African countryTanzania.