From Casual to Causal Inference in Accounting Research: The Need for Theoretical Foundations

Foundations and Trends in Accounting, Forthcoming

Stanford University Graduate School of Business Research Paper No. 15-63

51 Pages Posted: 23 Nov 2015 Last revised: 26 Jun 2016

See all articles by Jeremy Bertomeu

Jeremy Bertomeu

University of California, San Diego (UCSD) - Rady School of Management

Anne Beyer

Stanford University - Graduate School of Business

Daniel J. Taylor

Wharton School, University of Pennsylvania

Date Written: June 25, 2016

Abstract

On December 5th and 6th 2014, the Stanford Graduate School of Business hosted the Causality in the Social Sciences Conference. The conference brought together several distinguished speakers from philosophy, economics, finance, accounting and marketing with the bold mission of debating scientific methods that support causal inferences. We highlight key themes from the conference as relevant for accounting researchers. First, we emphasize the role of formal economic theory in informing empirical research that seeks to draw causal inferences, and offer a skeptical perspective on attempts to draw causal inferences in the absence of well-defined constructs and assumptions. Next, we highlight some of the conceptual limitations of quasi-natural experimental methods that were discussed at the conference, and discuss the role of structural estimation. Finally, we illustrate many of the points from the conference by estimating a novel, theoretically grounded measure of disclosure costs.

Keywords: causality, economic theory, quasi-natural experiments, structural models

JEL Classification: A11, B40, B41, M41

Suggested Citation

Bertomeu, Jeremy and Beyer, Anne and Taylor, Daniel, From Casual to Causal Inference in Accounting Research: The Need for Theoretical Foundations (June 25, 2016). Foundations and Trends in Accounting, Forthcoming; Stanford University Graduate School of Business Research Paper No. 15-63. Available at SSRN: https://ssrn.com/abstract=2694105 or http://dx.doi.org/10.2139/ssrn.2694105

Jeremy Bertomeu

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Anne Beyer

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Daniel Taylor (Contact Author)

Wharton School, University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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