DETERMINANTS OF DIFFERENT ACCOUNTING METHODS CHOICE IN TANZANIA : A POSITIVE ACCOUNTING THEORY APPROACH

Objectives: • The purpose of this study is to investigate the factors that influence the choice of accounting policies by managers of companies in Tanzania. • These studies also examine the number of factors that influence the managers’ incentives for accounting choice.

Population/ sample size:
The study investigates managers’ decisions to choose accounting methods in a positive accounting theory perspective using panel data covering 60 years from 15 companies listed on the Dar es Salaam Stock Exchange.

Research Methods: • Sample and data source: used quantitative methods to examine the relationship between independent variables and dependent variables. The data are drawn from annual reports of 15 companies listed on DSE for four years which resulted in 60 firm years. • Income strategy measurement: consider a company’s set of accounting choices that are disclosed in the company’s annual report as a single comprehensive decision. • Model specification: INCOME STRATEGY = α0 + α1 LEVER + α2 SIZE + α3 LABFORCE – α4 ODILUTION + α5 INTERFIN + α6 PROPNED + ε

Findings:
The results show that the significant factors are company size, internal financing, proportion of non-executive directors and labor force. Different with the outcome of prior studies, the authors found that the company size and internal financing are positively related with income strategy. So the research proves that there is a strong relationship between the choice of accounting methods and income strategy.

Conclusion/ contribution: • This study determines the factors which effect choice of accounting methods. • The research identifies the proportion of non-executive directors as a new factor impinging on the choice of accounting policies. • This study shows for the first time that the use of ratio of income-increasing accounting policies to total number of accounting policies can be used as a dependent variable.