Research Method and Methodology in Finance and Accounting
Bob Ryan Robert W. Scapens Michael Theobold
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Research Method and Methodology in Finance and Accounting Copyright © Bob Ryan, Robert W. Scapens and Michael Theobold 2002
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The philosophy of ﬁnancial research
Research is a process of intellectual discovery, which has the potential to transform our knowledge and understanding of the world around us. In this chapter we examine some of the fundamental assumptions upon which research in the ﬁnancial disciplines is based. These disciplines, like most others within the social sciences, are methodologically highly diverse. Scholars in these disciplines come from a variety of different backgrounds and sometimes make implicit but different methodological assumptions about the nature of reality, the role of theory and the signiﬁcance of empirical experimentation. Part of our task in this chapter is to make clear what those assumptions are and how they inﬂuence the research process. We start our discussions about research at a somewhat abstract level but, as we will demonstrate in later chapters, the issues we raise here condition much of what we have to say later about such questions as: . What are the different assumptions about the nature of ﬁnancial reality that
. What is the role of theory in acquiring knowledge about ﬁnancial and accounting
. How does research progress?
Given that research is fundamentally about the discovery, interpretation and communication of new knowledge there is still little agreement about the source of knowledge itself. The ﬁnancial disciplines have, over the last 40 years, provided a new intellectual arena for some very old debates, and our purpose here is to discuss the range of issues and debates, which are of importance to the practising researcher. To illustrate the methodological issues presented by ﬁnancial research, consider two studies recently published in the accounting literature. The ﬁrst by Maines and McDaniel (2000) is typical of the type of article found in the mainstream US literature and examines the effect of a disclosure requirement on the processing of ﬁnancial information by investors. This article draws upon prior work in psychology (Hogarth, 1987), which asserts that performance–assessment judgments are formed by individuals from a linear combination of cues. On the basis of this...