Municipal corporations exist in an institutional twilight area, being both private and public, a

characteristic, which presumably would be reflected in their choice of accounting standards. The

literature of accounting choice does not, however, live in a twilight area, but is fragmented into two

main divisions: positive accounting theory (PAT) and institutional theory (IT); only in a very fewcases

do the theories meet or cross-fertilize.We use both theories in this paper and derive hypotheses from

them to explain accounting choices made by municipal corporations. Through testing the hypotheses

on a sample of 545 Swedish municipal corporations, we indicate the empirical relevance of both PAT

and IT. We conclude by suggesting an integrative approach of PAT and IT in an eclectic alternative.