A Practical Guide to using Path Analysis: Mediation and Moderation in Accounting Research
53 Pages Posted: 18 Feb 2021 Last revised: 6 Feb 2022
Date Written: December 16, 2021
We use plain-English, figures, and simple math to explain how to use path analysis to test for mediation and moderation. Many theories in accounting research can be conceptualized as mediated, moderated or moderated-mediation models to investigate both simple and complex hypothesized relationships. Analyses using these models capture the dependent nature of an entire set of relationships rather than attempting to make piecemeal inferences from a series of individual regressions that may not be as revealing and may even yield misleading inferences. We introduce tools that help build theory, reduce the number of inferential tests that are relied on, and use bootstrapping for inferential tests of moderated mediation that do not rely on distributional assumptions. We provide two examples from published research to illustrate and apply these concepts. Tools for analysis include PROCESS (Hayes 2020) and structural equation modeling (SEM).
Keywords: theory-based model-building, path analysis, statistics, method, mediation, moderation, indirect versus direct effects, interaction, mechanisms, PROCESS, structural equation modeling (SEM), bootstrapping, confidence intervals
JEL Classification: C12, C18, C87, C90, M41, M42, M49
Suggested Citation: Suggested Citation