Research methods in Accounting – Malcomn Smith
Chapter one – Introduction and overview.................................................................................................... 2
Chapter two – Developing the research idea ............................................................................................... 4
Chapter three – Theory, literature and hypotheses ..................................................................................... 5
Chapter five – Data collection ....................................................................................................................... 7
Chapter six – Quantitative data analysis....................................................................................................... 8
Chapter seven - Qualitative data analysis................................................................................................... 13
Chapter eight – Experimental research ...................................................................................................... 15
Chapter nine – Survey research .................................................................................................................. 17
Chapter ten - Qualitative methods ............................................................................................................. 19
Chapter eleven – Archival research ............................................................................................................ 20
,Chapter one – Introduction and overview
The overall aim of the book is to facilitate the conduct of applies research studies in accounting, and to
do this we must recognize our reliance on work in other disciplines. To accomplish this aim, a number of
subordinate objectives may be identified, all of which will contribute to the overall goal:
• An understanding of contemporary research ideas in accounting, so that readers can identify and
define research problems and prepare strategies for their solution.
• An awareness of alternative research methods, to facilitate the selection of the most appropriate
method for addressing particular research questions.
• An ability to review existing research and to offer critiques of articles published in refereed
journals.
• An appreciation of the ethical constraints on the conduct of accounting research.
Research in accounting is connected with solving problems, investigating relationships and building a body
of knowledge. We can specify four basis levels of research:
• Description: concerned with the collection and reporting of data related to what is, or was, the
case. This would include means and standard deviations of individual variables and correlations
between pairs of variables.
• Classification: still descriptive, but easing the reporting process, and highlighting similarities and
clustering through grouping, classifying and cross-tabulation.
• Explanation: an attempt to make sense of observations by explaining the relationships observed
and attributing causality based on some appropriate theory.
• 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, ‘deductive’ (theory to observation) and ‘inductive’ (observation
theory), are important for theory construction and observation testing. Inductive reasoning starts with
specific observations (data) from which theories can be generated; a generalizable pattern may emerge
from further observations and repeated testing for compliance. Deductive reasoning starts with the
theory and proceeds to generate specific predictions, which follow from its application.
Deduction Induction
Although both models provide opportunities in accounting research, the deductive approach offers
greater possibilities for the implementation of scientific methods, since it facilitates arguably more reliable
management and control.
,In accounting research the uncertainty principle is active: actions of the participants in ethnographic,
experimental, survey or fieldwork impact on the outcomes of the measurement process. Three
fundamental criteria exist to judge whether a theory fits observation:
• Co-variation: even where no causality exists we would expect 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;
• 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.
• Absence of plausible rival hypothesis: the third rule seeks to eliminate alternative explanations of
the events as being implausible. This may only be possible in the present, because future
researchers may develop competing explanations of the events from a re-analysis of the data.
With the appropriate guidelines as to the right questions to ask, students can quickly develop some
confidence in their ability to spot flaws and omissions. We would usually want to address the following:
• Why is this article interesting/important?: the paper must offer some new insights which
constitute a contribution to knowledge.
• Are the outcomes important?: will anyone be interested in the outcomes of this research, or will
it have any implications for the future practice?
• What motivates the authors to write this article now?: the paper may be addressing issues of
contemporary concern, or on the other hand historical issues.
• What is the research problem/ question?: we are looking for a clear statement of the problem
very early on in the paper without a clear idea of its direction, or any sort of research model.
• What theory or theoretical framework underpins the research?, common deficiencies:
• the underlying theory is non-existent or extremely thin;
• the theoretical context is there but appears to have been tacked on as an
afterthought;
• the theoretical arguments are unconvincing;
• a sound theoretical framework but findings which are totally at odds with theory.
• What are the key motivating literatures on which the study depends?: there will normally be a
small number of seminal pieces of literature that are driving the research, therefore check if one
of them is unreliable of unpublished.
• Which research method has been choses?: there should be a justification of the chosen method,
and a clear preference over alternatives.
• How has the sample been selected?
• How have questions of validity been addressed?: choice of research method should address issues
of validity.
• How have results been analyzed?: we want to see the simplest analysis of the results consistent
with the relationship being explored.
• Are the conclusions and recommendations consistent with the findings?
,Chapter two – Developing the research idea
We expect the following progress in most forms of accounting research, when moving from original idea
to eventual publication:
• Identify broad area: narrow the focus from accounting in general to a stream associated with one
topic area;
• Select topic: specification provides a tighter focus;
• Decide approach
• Formulate plan
• Collect information: data collection can safely proceed only when we recognize exactly what we
want to know, and for what purpose;
• Analyze data
• Present findings
This research sequence can be massaged. Thus we can stay within the original research sequence, but can
also extend out. The following possibilities are available:
A valuable part of the internal planning process is the development of a conceptual representation of the
research project. This can help to clarify the important relationship, the explanatory and intervening
variables, as well as the demonstration of causation.
The following basis conceptual schema provides a powerful tool for the examining of causal relationships
in a positivists environment:
,Chapter three – Theory, literature and hypotheses
Some terminology:
• Theory: a network of hypotheses or an all-embracing notion that underpins one or more
hypotheses.
• Hypotheses: are 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: are abstract ideas, not directly observable or measurable, which must first be
operationalized in some way to provide measurable indicators. This will be achieved 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: are indirect measures of concepts usually generated in the form of multiple questions.
• Variables: are observable items which van assume different values. Variables are usually
independent, dependent, moderating (have a conditional influence), mediation (have a dominant
influence on the independent relationship) or intervening.
• 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.
Questions of validity are best considered in the trade-offs we have to make, usually between reliability
and construct validity on the one hand, and between internal validity and external validity on the
other. If we have internal validity then we are able to eliminate rival hypotheses because we can
specify causal relationships; we know what is causing what because we are controlling for all other
influential factors. This scenario only precisely fits experiments under laboratory conditions,
conducted under strict control an perhaps based on unrealistic assumptions. This findings may have
no external validity; they cannot be generalized to the ‘real world’ because they only apply in the
laboratory.
Both construct validity and internal validity are wholly dependent on good theory: establishing a
research design appropriate concept which are underpinned by theory and which are realistically
linked to their means of measurement.
The fundamental distinction underpinning accounting theory is that between normative theory (what
ought to be) and positive theory (of what is or will be).
Intervening variable: there is no direct relationship between the original independent and dependent
variable. Instead, the mediating (intervening) variable is effectively the dependent variable in one
relationship and the independent
variable in a second relationship.
, Alternatively, the intervening influential variable may have a moderating effect in that the relationship
between dependent and independent variables is conditional on the values assumed by the other
variables.
Thus the strength of the relationship may depend on the moderator.
The influential variables may be superfluous to the relationship of interest because they impact on
each separately, by exerting an overriding influence. They are then termed extraneous.
Hypotheses must be testable. Their content must be measurable in some way even if they are not
directly observable. For these purposes, ration and interval scales of measurement are preferred
because they make possible a wider number of analytical alternatives, bur ordinal and nominal scales
are common in the accounting literature, and methods exists for their analysis.
Theory and existing literature should drive the formation of hypotheses so that wat we postulate is
eminently feasible based on the existing evidence.
The hypothesis will normally be stated in null or alternative forms. The null hypothesis (H 0 ) postulates
the existence of no relationship between the variables of interest; we then attempt to assemble
sufficient evidence to suggest that, statistically, the null hypothesis is not a reasonable assumption. If
we have prior evidence to suggest a direction of causality, then we have no realistic alternative but to
adopt a null hypothesis format.
The alternative hypothesis (H 1 ) postulates the existence of a directed (often causal) relationship.
In conducting tests of hypotheses we are faced with the possibility of making two errors:
• The rejection of a true null hypothesis
• The acceptance of a false null hypothesis
Summary types of validity:
• Internal validity the extent of which inferences about observed covariation between independent
variable and dependent variable reflect a causal relationship between both variables as those
variables were manipulated or measured
• Construct validity: the extent to which the operationalization of units, treatments, observations
and setting captures the higher order constructs.
• Statistical conclusion validity: the appropriate use of statistics to infer whether the presumed
independent and dependent variables covary.
• External validity: the extent to which the results hold over variations in persons, settings,
treatments and outcomes (i.e. generalizability of results).
Chapter one – Introduction and overview.................................................................................................... 2
Chapter two – Developing the research idea ............................................................................................... 4
Chapter three – Theory, literature and hypotheses ..................................................................................... 5
Chapter five – Data collection ....................................................................................................................... 7
Chapter six – Quantitative data analysis....................................................................................................... 8
Chapter seven - Qualitative data analysis................................................................................................... 13
Chapter eight – Experimental research ...................................................................................................... 15
Chapter nine – Survey research .................................................................................................................. 17
Chapter ten - Qualitative methods ............................................................................................................. 19
Chapter eleven – Archival research ............................................................................................................ 20
,Chapter one – Introduction and overview
The overall aim of the book is to facilitate the conduct of applies research studies in accounting, and to
do this we must recognize our reliance on work in other disciplines. To accomplish this aim, a number of
subordinate objectives may be identified, all of which will contribute to the overall goal:
• An understanding of contemporary research ideas in accounting, so that readers can identify and
define research problems and prepare strategies for their solution.
• An awareness of alternative research methods, to facilitate the selection of the most appropriate
method for addressing particular research questions.
• An ability to review existing research and to offer critiques of articles published in refereed
journals.
• An appreciation of the ethical constraints on the conduct of accounting research.
Research in accounting is connected with solving problems, investigating relationships and building a body
of knowledge. We can specify four basis levels of research:
• Description: concerned with the collection and reporting of data related to what is, or was, the
case. This would include means and standard deviations of individual variables and correlations
between pairs of variables.
• Classification: still descriptive, but easing the reporting process, and highlighting similarities and
clustering through grouping, classifying and cross-tabulation.
• Explanation: an attempt to make sense of observations by explaining the relationships observed
and attributing causality based on some appropriate theory.
• 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, ‘deductive’ (theory to observation) and ‘inductive’ (observation
theory), are important for theory construction and observation testing. Inductive reasoning starts with
specific observations (data) from which theories can be generated; a generalizable pattern may emerge
from further observations and repeated testing for compliance. Deductive reasoning starts with the
theory and proceeds to generate specific predictions, which follow from its application.
Deduction Induction
Although both models provide opportunities in accounting research, the deductive approach offers
greater possibilities for the implementation of scientific methods, since it facilitates arguably more reliable
management and control.
,In accounting research the uncertainty principle is active: actions of the participants in ethnographic,
experimental, survey or fieldwork impact on the outcomes of the measurement process. Three
fundamental criteria exist to judge whether a theory fits observation:
• Co-variation: even where no causality exists we would expect 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;
• 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.
• Absence of plausible rival hypothesis: the third rule seeks to eliminate alternative explanations of
the events as being implausible. This may only be possible in the present, because future
researchers may develop competing explanations of the events from a re-analysis of the data.
With the appropriate guidelines as to the right questions to ask, students can quickly develop some
confidence in their ability to spot flaws and omissions. We would usually want to address the following:
• Why is this article interesting/important?: the paper must offer some new insights which
constitute a contribution to knowledge.
• Are the outcomes important?: will anyone be interested in the outcomes of this research, or will
it have any implications for the future practice?
• What motivates the authors to write this article now?: the paper may be addressing issues of
contemporary concern, or on the other hand historical issues.
• What is the research problem/ question?: we are looking for a clear statement of the problem
very early on in the paper without a clear idea of its direction, or any sort of research model.
• What theory or theoretical framework underpins the research?, common deficiencies:
• the underlying theory is non-existent or extremely thin;
• the theoretical context is there but appears to have been tacked on as an
afterthought;
• the theoretical arguments are unconvincing;
• a sound theoretical framework but findings which are totally at odds with theory.
• What are the key motivating literatures on which the study depends?: there will normally be a
small number of seminal pieces of literature that are driving the research, therefore check if one
of them is unreliable of unpublished.
• Which research method has been choses?: there should be a justification of the chosen method,
and a clear preference over alternatives.
• How has the sample been selected?
• How have questions of validity been addressed?: choice of research method should address issues
of validity.
• How have results been analyzed?: we want to see the simplest analysis of the results consistent
with the relationship being explored.
• Are the conclusions and recommendations consistent with the findings?
,Chapter two – Developing the research idea
We expect the following progress in most forms of accounting research, when moving from original idea
to eventual publication:
• Identify broad area: narrow the focus from accounting in general to a stream associated with one
topic area;
• Select topic: specification provides a tighter focus;
• Decide approach
• Formulate plan
• Collect information: data collection can safely proceed only when we recognize exactly what we
want to know, and for what purpose;
• Analyze data
• Present findings
This research sequence can be massaged. Thus we can stay within the original research sequence, but can
also extend out. The following possibilities are available:
A valuable part of the internal planning process is the development of a conceptual representation of the
research project. This can help to clarify the important relationship, the explanatory and intervening
variables, as well as the demonstration of causation.
The following basis conceptual schema provides a powerful tool for the examining of causal relationships
in a positivists environment:
,Chapter three – Theory, literature and hypotheses
Some terminology:
• Theory: a network of hypotheses or an all-embracing notion that underpins one or more
hypotheses.
• Hypotheses: are 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: are abstract ideas, not directly observable or measurable, which must first be
operationalized in some way to provide measurable indicators. This will be achieved 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: are indirect measures of concepts usually generated in the form of multiple questions.
• Variables: are observable items which van assume different values. Variables are usually
independent, dependent, moderating (have a conditional influence), mediation (have a dominant
influence on the independent relationship) or intervening.
• 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.
Questions of validity are best considered in the trade-offs we have to make, usually between reliability
and construct validity on the one hand, and between internal validity and external validity on the
other. If we have internal validity then we are able to eliminate rival hypotheses because we can
specify causal relationships; we know what is causing what because we are controlling for all other
influential factors. This scenario only precisely fits experiments under laboratory conditions,
conducted under strict control an perhaps based on unrealistic assumptions. This findings may have
no external validity; they cannot be generalized to the ‘real world’ because they only apply in the
laboratory.
Both construct validity and internal validity are wholly dependent on good theory: establishing a
research design appropriate concept which are underpinned by theory and which are realistically
linked to their means of measurement.
The fundamental distinction underpinning accounting theory is that between normative theory (what
ought to be) and positive theory (of what is or will be).
Intervening variable: there is no direct relationship between the original independent and dependent
variable. Instead, the mediating (intervening) variable is effectively the dependent variable in one
relationship and the independent
variable in a second relationship.
, Alternatively, the intervening influential variable may have a moderating effect in that the relationship
between dependent and independent variables is conditional on the values assumed by the other
variables.
Thus the strength of the relationship may depend on the moderator.
The influential variables may be superfluous to the relationship of interest because they impact on
each separately, by exerting an overriding influence. They are then termed extraneous.
Hypotheses must be testable. Their content must be measurable in some way even if they are not
directly observable. For these purposes, ration and interval scales of measurement are preferred
because they make possible a wider number of analytical alternatives, bur ordinal and nominal scales
are common in the accounting literature, and methods exists for their analysis.
Theory and existing literature should drive the formation of hypotheses so that wat we postulate is
eminently feasible based on the existing evidence.
The hypothesis will normally be stated in null or alternative forms. The null hypothesis (H 0 ) postulates
the existence of no relationship between the variables of interest; we then attempt to assemble
sufficient evidence to suggest that, statistically, the null hypothesis is not a reasonable assumption. If
we have prior evidence to suggest a direction of causality, then we have no realistic alternative but to
adopt a null hypothesis format.
The alternative hypothesis (H 1 ) postulates the existence of a directed (often causal) relationship.
In conducting tests of hypotheses we are faced with the possibility of making two errors:
• The rejection of a true null hypothesis
• The acceptance of a false null hypothesis
Summary types of validity:
• Internal validity the extent of which inferences about observed covariation between independent
variable and dependent variable reflect a causal relationship between both variables as those
variables were manipulated or measured
• Construct validity: the extent to which the operationalization of units, treatments, observations
and setting captures the higher order constructs.
• Statistical conclusion validity: the appropriate use of statistics to infer whether the presumed
independent and dependent variables covary.
• External validity: the extent to which the results hold over variations in persons, settings,
treatments and outcomes (i.e. generalizability of results).
