Custom Contrast Testing: Current Trends and a New Approach

Posted: 20 Jun 2016 Last revised: 29 May 2018

See all articles by Ryan Guggenmos

Ryan Guggenmos

SC Johnson Graduate School of Management; Cornell SC Johnson College of Business

M. David Piercey

University of Massachusetts Amherst

Christopher P. Agoglia

University of Massachusetts at Amherst

Date Written: November 14, 2017

Abstract

Contrast analysis has become prevalent in experimental accounting research since Buckless and Ravenscroft (1990) introduced it to the accounting literature over twenty-five years ago. Since its initial introduction, the scope of contrast testing has expanded, yet guidance as to the most appropriate methods of specifying, conducting, interpreting, and exhibiting these tests has not. We survey the use of contrast analysis in the recent literature and propose a three-part testing approach that provides a more comprehensive picture of contrast results. Our approach considers three pieces of complementary evidence: the visual evaluation of fit, traditional significance testing, and quantitative evaluation of the contrast variance residual. Our measure of the contrast variance residual, q2, is proposed for the first time in this work. After proposing our approach, we walk through six common contrast testing scenarios where current practices may fall short and our approach may guide researchers. We extend Buckless and Ravenscroft (1990) and contribute to the accounting research methods literature by documenting current contrast analysis practices that result in elevated Type I error and by proposing a potential solution to mitigate these concerns.

Keywords: Contrast weights, interactions, experimental research, accounting research

JEL Classification: C10, C12, C13, C90, M40, M41, M49

Suggested Citation

Guggenmos, Ryan and Piercey, M. David and Agoglia, Christopher P., Custom Contrast Testing: Current Trends and a New Approach (November 14, 2017). The Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2797514 or http://dx.doi.org/10.2139/ssrn.2797514

Ryan Guggenmos

SC Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

M. David Piercey (Contact Author)

University of Massachusetts Amherst ( email )

Isenberg School of Management
121 Presidents Drive
Amherst, MA 01003
United States

Christopher P. Agoglia

University of Massachusetts at Amherst ( email )

Department of Accounting & Information Systems
121 Presidents Drive
Amherst, MA 01003-4910
United States
413 545-5582 (Phone)
413 545-3858 (Fax)

Do you want regular updates from SSRN on Twitter?

Paper statistics

Abstract Views
2,991
PlumX Metrics