CHAPTER 1: INTRODUCTION AND OVERVIEW
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Research in accounting – solving problems,
investigating relationships and building a body
of knowledge.
Bennet (1991) four basic levels of research
o Description – collection and reporting
of data related to what is, or was, the
case. Include standard deviations of
individual variables, correlations
between pairs of variables.
o Classification – still descriptive but
easing the reporting process, and
highlighting similarities and clustering
through grouping and classifying.
o Explanation – an attempt to make
sense of behaviors by explaining the
relationships observed and attributing
causality based on some appropriate
theory.
o Prediction – going beyond the
understanding and explaining of the
prior stage, to model observations in a
way that allows testable predictions to
be made of unknown events.
Two major processes of reasoning:
o Deductive (theory to observation) –
starts with theory and proceeds to
generate specific predictions which
follow from its application. Predictions
can be verified.
o Inductive (observation to theory) –
starts with specific observations (data)
from which theories can be generated;
a generalizable pattern may emerge
from further observations and repeated
testing for compliance. Hawking (1998)
notes that generalizations made can
never be regarded as ‘certain’ since just
one contrary instance can cause them
to be overturned.
Strict division of reasoning processes is not
always helpful because interdependencies
always exist
o Induction will usually imply some
knowledge of theory in order to select
the data to be observe.
o Deduction will be dependent on the
selection of the initial hypotheses for
testing.
New approach
1. Interpretive perspective – human
actions are the result of external
influences. Active participation rather
than detached observation.
2. Critical perspective – focusing on the
ownership of knowledge and the
associated social, economic and
political implications.
Popper (1959) – genuine test of a theory is an
attempt to falsify it or refute it.
Three fundamental criteria exist to judge
whether theory fits observation
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1. Co-variation – even where no causality
exists we would expect the two
variables to move together so that a
high degree of correlation exists
between the two variables. Where
there is no co-variation it will be
difficult to establish a causal link.
2. Cause prior to effect – if a causal link is
to be established then the ‘causal
event’ should occur before the ‘effect
event’. The sequence of events can
therefore help to establish an
explanatory direction.
3. Absence of plausible rival hypotheses –
seeks to eliminate alternative
explanations of the events as being
implausible.
Critique published articles
1. Why is this article
interesting/important?
2. Are the outcomes important?
3. What motivates the authors to write
this article now?
4. What is the research
problem/question?
5. What theory or theoretical framework
underpins the research?
6. What are the key motivating literatures
on which the study depends?
7. Which research method has been
chosen?
8. How does the sample been selected?
9. How have questions of validity been
addressed?
10. How have the results been analyzed?
11. Are the conclusions and
recommendations consisted with the
findings?
CHAPTER 2: DEVELOPING THE RESEARCH IDEA
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Research sequence
1. Identify broad area
2. Select topic
3. Decide approach
4. Formulate plan
5. Collect information
6. Analyze data
7. Present findings
 The positivist approach
1. Problem
2. Literature review
3. Hypothesis development
4. Method
5. Results
 Alternative research methods
Archival research  Hypothesis testing using
Laboratory
standard
experiments
instruments/method/controls
Survey method
 Quantitative data
 Deductive positivism
Action research
 Quasi-research methods
 Field-based
surveys/interviews
Field research
 Subjective accounts ‘inside’
situations
 No a priori hypotheses
 Qualitative data
Ethnographic
method
 Research proposal elements
o Title
o Abstract
o Issues
o Objectives
o Literature
o Method
o Benefits
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Basic conceptual scheme – provides a powerful
tool for the examination of causal relationship
in a positivist environment.
Dependent variables – one or more outcome
variables whose value may be influenced by a
number (independent) explanatory factors.
CHAPTER 3: THEORY, LITERATURE AND HYPOTHESES
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Three characteristics of accounting research
o Theory
o Reliability
o Validity
Expanded
o Good theory
o Reliability
o Construct validity
o Internal validity
o External validity
Theory – network of hypotheses or an allembracing notion that underpins one or more
hypotheses
Hypotheses – supposed relationships, possibly
causal links, between two or more concepts or
variables. A hypothesis should be testable, but
it may not be directly so if it comprises a
number of abstract concepts.
Concepts – abstract ideas, not directly
observable or measurable which must first be
operationalized in some way to provide
measurable indicators. Either by identifying a
variable that is an adequate substitute for the
concept or by developing a construct to provide
a new measure of the concept.
Constructs – indirect measures of concepts
usually generated in the form of multi-item
questions. The sum of a set of valid and reliable
responses to the construct provides a measure
of the concept.
Variables – observable items which can assume
different values. Values can be measured either
directly or indirectly through the use of proxy
(substitute) variables.
o Independent – explanatory
o Dependent – are explained by the
independent variables
o Moderating – have a conditional
influence
o Intervening – with an influence,
potentially spurious, that needs to be
controlled
Reliability – establishes the consistency of a
research instrument in that the results it
achieves should be similar in similar
circumstances.
Validity – measures the degree to which our
research achieves what it sets out to do.
With internal validity – able to eliminate rival
hypotheses with confidence because we can
specify causal relationships; we know what is
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causing what because we are controlling for all
other influential factors.
No external validity – they cannot be
generalized to the ‘real world’ because they
only apply in the laboratory.
Fundamental trade-off: we may have to
compromise loss of internal validity (loosening
the confidence we have in the relationships) in
order to increase external validity (and realism).
Fundamental distinction underpinning
accounting theory
o Normative theory – of what ought to be
o Positive theory – of what is or will be
Economics
 Early researchers: