Discussion of The Municipal Accounting Maze: An Analysis of Political Incentives

Discussing a paper is somewhat like taking a multiple choice examination. The discussant is usually expected to take issue with a paper .by showing that the author's results are either (a) trivial, (b) well known, (c) incorrect, or (d) all of the above. If, in addition, the discussant can do this with an appropriate degree of savagery, he gets extra points for showmanship. There are thus two things that can take the fun out of being a discussant: one is a paper so weak that it would be in poor taste to attack it with vigor, and the other is a paper which the discussant finds interesting and important. In this sense, my job as a discussant of Professor Zimmerman's paper is not much fun because it contains many things that I think are interesting and important. Before turning to the details, let me explain why I feel this way. Zimmerman's paper is one of a new genre that makes an effort to construct a positive theory of accounting. Though relatively new, I have already heard this approach referred to as the Rochester School of Accounting, presumably because much of the initial impetus came from people at the Graduate School of Management at the University of Rochester within the past couple of years. I am not sufficiently familiar with the history of thought in accounting to assert with confidence that this line of research is only two years old, but it is certainly my impression that the positive theory of accounting has not been a major part of the accounting literature. To explain why I think efforts to build a positive theory of accounting are both interesting and important, I would like to point out some