Causal Inference in Accounting Research

64 Pages Posted: 9 Feb 2016 Last revised: 29 Jun 2016

See all articles by Ian D. Gow

Ian D. Gow

University of Melbourne

David F. Larcker

Stanford University - Graduate School of Business

Peter C. Reiss

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2016

Abstract

This paper examines the approaches accounting researchers use to draw causal inferences using observational (or non-experimental) data. The vast majority of accounting research papers draw causal inferences notwithstanding the well-known difficulties in doing so. While some recent papers seek to use quasi-experimental methods to improve causal inferences, these methods also make strong assumptions that are not always fully appreciated. We believe that accounting research would benefit from: more in-depth descriptive research, including a greater focus on the study of causal mechanisms (or causal pathways); increased emphasis on structural modeling of the phenomena of interest. We argue these changes offer a practical path forward for rigorous accounting research.

Keywords: accounting research, causal inferences, study of causal mechanisms, study of causal pathways, econometrics

JEL Classification: C20, C30, M20, M40

Suggested Citation

Gow, Ian D. and Larcker, David F. and Reiss, Peter C., Causal Inference in Accounting Research (May 2016). Journal of Accounting Research, Vol. 54, No. 2, 2016; Rock Center for Corporate Governance at Stanford University Working Paper No. 217; Stanford University Graduate School of Business Research Paper No. 16-16. Available at SSRN: https://ssrn.com/abstract=2729565 or http://dx.doi.org/10.2139/ssrn.2729565

Ian D. Gow (Contact Author)

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

David F. Larcker

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Peter C. Reiss

Stanford Graduate School of Business ( email )

Stanford, CA 94305-5015
United States
650-725 2759 (Phone)
650-725-7979 (Fax)

HOME PAGE: http://www.stanford.edu/~preiss

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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