Overview of Empirical Accounting Research
Introduction:
This course is designed to provide first and second year doctoral students with an overview of empirical accounting research. We will focus on two key aspects of the research process, a) properly defining a research question and b) properly designing a study to answer that question. My intention is to cover in depth one paper each class session. The papers included on the attached reading list are intended to illustrate the variety of questions examined as well as showing how one paper can build off of a previous paper.
Because of the difference in past research experience between students beginning their first year in a doctoral program and students beginning their second year in the program, I have set out a separate set of objectives, requirements, and expectations for each group.
First Year Students
For first year students this course is intended to be an introduction to empirical research, in general, and accounting empirical research in particular. As a result, the primary objective is to develop your skills to the point that you can understand and critically evaluate research papers. You will be expected to read each of the assigned papers thoroughly before each class session and actively participate in the discussion. Do not be discouraged if you have difficulty understanding the papers in the beginning of the term. This is to be expected. As your exposure to the underlying economic theory and basic statistical methods expands, so will your ability to comprehend and critique research.
As a result, at the beginning of the term I will expect you to approach the papers on a very intuitive level. You should be able to assess whether the questions addressed in the study and the conclusions reached by the researcher make sense. Students should also be able to consider alternative explanations that could account for the empirical findings. By the end of the term you should be able to write critiques of empirical papers.
In order to develop these skills students will be required to write critiques for each paper presented in an accounting or finance research workshop. The critiques will take the form of beginning with a three paragraph introduction that describes a) the problem addressed in the paper, b) why the problem is important, and c) how the paper addresses the problem. The remainder of the paper (1 - 2) pages should revolve around questions and/or comments the student has about the paper.
Finally, students need to learn how to use electronic data bases in their own study. To achieve this goal, students will have a term project. This term project will revolve around replicating one of the studies covered in this course. In so doing, students will learn how to extract data from Compustat and CRSP, write SAS programs to manipulate the data, construct a table that presents the results in a clear, concise manner, and write an analysis of your findings.
Second Year Students
For second year students this course is intended to provide a means for developing your skills in designing a research study. In my view, the traditional model of having you read and critique papers will not accomplish this objective. All you see in the final paper is the end product of the research design process (along with some mention of sensitivity analysis). By simply reading the paper you will not get a feel for the creative process that led to the final research design. A focus on the final version of the paper will also hide all of the interim decisions the researcher needed to make in getting to the final product.
In order to address these shortcomings, I intend to take a different approach to this class. Beginning with the paper for Monday, October 13, a second-year student will lead the discussion for each class session. During the last 15 - 20 minutes of the previous class session (Wednesday, October 8 in this case), the person assigned for October 13 will present the research question and the hypotheses to be investigated. The other second year students will then write-up and a research design to address the research question (test the hypotheses). I ask that the students do this BEFORE reading the paper. That is, only the second-year student responsible for presenting the paper will read the paper before Monday, October 13. During the class discussion, the remaining second year students will then be able to compare the research design of the authors of the paper to their own.
Like the first year students, second year students will be required to write critiques of papers presented in accounting and finance workshops. The format of the papers will be the same as those prepared by the first-year students although the questions and comments should reflect the student's additional year of study. Second year students are also expected to actively participate in the workshops by asking questions of the presenter.
The term project for the second year students will be to describe a research design to examine a research question supplied by the instructor. The study design should be complete and include sample selection, definition of the variables (with special attention given to differentiating between test variables and control variables), predictions, and test statistics. Students should also provide a brief discussion of sensitivity analysis.
Reading List
Kinney, "Empirical Accounting Research Design for Ph. D. Students," The Accounting Review, April 1986.
Burgstahler, "Inference from Empirical Research," The Accounting Review, January 1987.
Bernard, "Capital Markets Research in Accounting During the 1980s: A Critical Review," 1989 Illinois Golden Jubilee Symposium paper.
Jensen & Meckling, "Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure," Journal of Financial Economics, October 1976.
Collins & Kothari, "An Analysis of Intertemporal and Cross-Sectional Determinants of Earnings Response Coefficients," Journal of Accounting and Economics, July 1989.
Ou & Penman, "Financial statement analysis and the prediction of stock returns, Journal of Accounting and Economics, November 1989.
Lev & Thiagarajan, "Fundamental Information Analysis", Journal of Accounting Research, Autumn, 1993.
Barth, Beaver & Landsman, "The Market Valuation Implications of Net Periodic Pension Cost Components", Journal of Accounting and Economics, March 1992.
M 10/27 Venkatachalam, "Value-Relevance of Banks' Derivative Disclosures", Journal of Accounting and Economics, August 1996.
Skinner, "Are Disclosures about Bank Derivatives and Employee Stock Options 'Value-Relevant'?", Journal of Accounting and Economics, August 1996.
Dechow, Sloan & Sweeney, "Detecting Earnings Management," The Accounting Review, April 1995.
Warfield, Wild & Wild, "Managerial Ownership, Accounting Choices, and Informativeness of Earnings, Journal of Accounting and Economics, July 1995
Subramanyam, "The Pricing of Discretionary Accruals," Journal of Accounting and Economics, August 1996.
Bernard & Skinner, "What Motivates Managers' Choice of Discretionary Accruals?," Journal of Accounting and Economics, August 1996. (Stan)
Matsunaga, Shevlin & Shores, "Disqualifying Dispositions of Incentive Stock Options: Tax Benefits versus Financial Reporting Costs,"Journal of Accounting Research Supplement 1992.
Larcker, "Discussion of Disqualifying Dispositions of Incentive Stock Options: Tax Benefits vs. Financial Reporting Costs," Journal of Accounting Research Supplement 1992.
Skinner, "Why Firms Voluntarily Disclose Bad News", Journal of Accounting Research, Sp 94.
Ittner & Larcker, "Total Quality Management and the Choice of Information and Reward Systems", Journal of Accounting Research Supplement 1995.
Ittner, Larcker & Rajan, "The Choice of Performance Measures in Annual Bonus Contracts", The Accounting Review, April 1997.
Baber, Janakiraman & Kang, "Investment Opportunities and the Structure of Executive Compensation", Journal of Accounting and Economics, Jan 1993.
Bushman, Indejikian & Smith, "CEO Compensation: The Role of Individual Performance Evaluation", Journal of Accounting and Economics, April 96.
Bushman, Indejikian & Smith, "Aggregate Performance Measures in Business Unit Manager Compensation, The Role of Intrafirm Interdependencies", Journal of Accounting Research Supplement 1995.
Hemmer, Matsunaga & Shevlin, "The Influence of Risk Diversification on the Early Exercise of Employee Stock Options by Executive Officers", Journal of Accounting & Economics, Vol. 21 No. 1, February 1996.
Copyright © 1998 by Department of Accounting, University of Oregon.