Discontinuous Distribution of Test Statistics Around Significance Thresholds in Empirical Accounting Studies *

51 Pages Posted: 12 Jan 2021 Last revised: 12 Jul 2024

See all articles by Xin Chang

Xin Chang

Nanyang Business School, Nanyang Technological University

Huasheng Gao

Fanhai International School of Finance, Fudan University

Wei Li

City University of Hong Kong (CityU)

Date Written: September 5, 2017

Abstract

Examining test statistics from articles in six leading accounting journals, we detect discontinuities in their distributions around conventional significance thresholds (p-values of 0.05 and 0.01) and find an unusual abundance of test statistics that are just significant. Further analysis reveals that these discontinuities are more prominent in studies with smaller samples and are more salient in experimental than in archival studies. The discontinuity discrepancy between experimental and archival studies relates to several proxies for researcher degrees of freedom. Nevertheless, this evidence does not imply that experimental research is more prone to questionable research practices than archival studies. Overall, our findings speak to the concern whether accounting researchers could exercise undisclosed discretion to obtain and report statistically significant results. Based on our results, a healthy skepticism of some just-significant test statistics is warranted.

Keywords: P-value discontinuity, Experimental accounting, Archival accounting, Researcher degrees of freedom. JEL Classification: C12, C40, M40, M41, M42

Suggested Citation

Chang, Xin and Gao, Huasheng and Li, Wei, Discontinuous Distribution of Test Statistics Around Significance Thresholds in Empirical Accounting Studies * (September 5, 2017). Nanyang Business School Research Paper No. 21-01, Available at SSRN: https://ssrn.com/abstract=3762342 or http://dx.doi.org/10.2139/ssrn.3762342

Xin Chang (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

HOME PAGE: https://personal.ntu.edu.sg/changxin/

Huasheng Gao

Fanhai International School of Finance, Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China
2165642222 (Phone)
2165642222 (Fax)

Wei Li

City University of Hong Kong (CityU) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
297
Abstract Views
2,193
Rank
194,386
PlumX Metrics