The Suitability of the Case Study Method for Use in a Financial Dissertation - Essay Example

? On the Suitability of the Case Study Method for Use in a Financial Dissertation, Choosing the Most Appropriate Research Method Table of Contents I.Introduction 3 II. The Suitability of the Case Study Method for Use in a Financial Dissertation 3 III. On the Most Suitable Research Method for Use in a Financial Dissertation 6 References 10 I. Introduction The paper examines the applicability of the case study method to the dissertation topic of reducing risk via the use of derivatives. The goal is to be able to determine how suitable the research method is for the purposes of undertaking the dissertation well, and if not, what the best method is for undertaking a financial dissertation? The paper tries to answer this question, and present the suitable research method if there is one that is better suited than the case study method. In particular, the paper addresses the following questions: One, does the case study design for the research apply for undertaking a financial dissertation involving the reduction of risks with the use of derivatives? Two, if the answer is yes, why is this so, and if not, why is this so? Three, if the answer is yes, what are the recommendations for the utilization and deployment of the strategies for research and the methods of research tied to the case study research design/method? Four, if the answer is no, what would be the most appropriate research design, and why is this the most appropriate? As a continuation to question four, what would be the recommendations for the utilization and deployment of the research methods and strategies tied to the most suitable research design/method identified as being more suitable than the case study method? II. The Suitability of the Case Study Method for Use in a Financial Dissertation How suitable is the case study method for a financial dissertation investigating the use of derivatives to reduce risk, or for any financial dissertation for that matter? We go back to the roots of the case study method, and from there find out the answer to this question. First, one can surmise that the financial dissertation would be heavy on the quantitative aspects of the question, because a financial dissertation would naturally lean towards the quantitative aspects of the research question. Derivatives to hedge risks and to manage the risks would naturally lend itself to quantitative research methods. How does the case study method fare in this respect? We get from the literature that the case study method is essentially a qualitative research method. By qualitative is meant that the case study method excels where the dissertation involves situating the research topic in a certain sociological or network context. By this is meant that subjective people and relational factors are important considerations. The definition below captures some of the flavor and some of the relevant contexts for the proper use of the case study method, and it is noteworthy that this definition below makes references to organizational contexts, social contexts, subjective user contexts, and other relational contexts (Jones 2000): Case studies are particularly valuable for understanding complex phenomena in context, and according to Yin (1989) when “users’ intentions, technology use patterns, and social impacts – cannot be clearly separated from the social, technological, and organizational contexts in which they occur.” Interpretive field studies are often based in turn on the “soft case” study approach, described by Braa and Vidgen (1997) as a research framework for organizational study in information systems research. They demarcate between methods appropriate for prediction, understanding, and change; and soft cases are adopted when the research intent warrants understanding phenomena. Recognizing that many studies address more than one of these intents in varying degree, research approaches are mapped to the outcomes desired by the research intents. For predictive outcomes, reduction approaches are used; understanding necessitates an interpretive approach; and for institutional change, intervention approaches are employed. The research intention was to develop understanding, with an orientation toward social change. An interpretive approach was found suitable for this research. (Jones 2000). In the above definition, the emphasis is on the usefulness of the case study method when investigating a topic in context, and from the vantage points of relationships and entanglements. It is necessarily concerned with the qualitative nature of the thing being investigated, as things such as relationships and contexts are best described and investigated in qualitative rather than quantitative modes and methods. The same message is expressed in another take on the nature of the case study method below (Soy 1997): Case study research excels at bringing us to an understanding of a complex issue or object and can extend experience or add strength to what is already known through previous research. Case studies emphasize detailed contextual analysis of a limited number of events or conditions and their relationships. Researchers have used the case study research method for many years across a variety of disciplines. Social scientists, in particular, have made wide use of this qualitative research method to examine contemporary real-life situations and provide the basis for the application of ideas and extension of methods. Researcher Robert K. Yin defines the case study research method as an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used (Soy 1997). There are also aspects of the case study method that talk about the method being concerned with the inputs from the participants and stakeholders in the process being studied, of the nature that are not always numerical in the inputs, but rather are concerned with the qualitative nature of the experiences of the stakeholders. The case study method excels in these areas where contexts, relationships, and subjective/qualitative inputs are important (Tellis 1997): Case study is an ideal methodology when a holistic, in-depth investigation is needed…Case studies have been used in varied investigations, particularly in sociological studies, but increasingly, in instruction. Yin, Stake, and others who have wide experience in this methodology have developed robust procedures. When these procedures are followed, the researcher will be following methods as well developed and tested as any in the scientific field. Whether the study is experimental or quasi-experimental, the data collection and analysis methods are known to hide some details (Stake, 1995). Case studies, on the other hand, are designed to bring out the details from the viewpoint of the participants by using multiple sources of data. (Tellis 1997). From the above discussion, and given what we have said earlier about the quantitative nature of a financial dissertation in general, and of a financial dissertation centered on the use of derivatives to manage risks, we can see that the case study method is an ill fit, given that the case study research design is heavily qualitative in its use of inputs and in its analytical methods. (Tellis 1997; Soy 1997; Jones 2000). III. On the Most Suitable Research Method for Use in a Financial Dissertation Given that we have proved that the case study method is inappropriate for use in a financial dissertation as we earlier described, the next question is what is the most suitable research method, and how is it to be deployed/used for the purposes stated here? There are several ways to frame the research question in such a way as to lend the research question to various appropriate research methods and research designs. In a causal framing of the question, for instance, we are able to frame the topic in such a way as to investigate the effect of hedging, via the use of derivatives, on risks. One way to frame it is this, does the use of derivatives mitigate risks in finance? Another way to put is this, does the use of derivatives reduce the risks involved in financial transactions, or do derivatives either do not affect or increase the level of risks associated with certain financial instruments and transactions? Clearly, from this exercise in the framing of the question one can see that the way the question is framed has a bearing on the appropriate method of research that will yield the right answers, and is optimal. In an ideal research design, then, such questions could be set up where the dependent variable is the level of risk associated with varying levels of exposure to derivatives or hedges, which is the independent variable. The test then would be to gauge whether there is a correlation between hedging or the use of derivatives and the risks associated with a financial instrument. The population would consist of financial instruments, some with associated hedging or derivatives, and some without associated hedges or derivatives. These could be designated by corresponding values for instance with derivatives D being one or zero indicating the presence or the absence of a hedge. The regression analysis would then determine whether the risk would be correlated with the hedging. The regression analysis would then show whether there is a statistical difference in the associated risks between financial instruments with derivatives or hedges tied to them, and financial instruments that have no derivatives associated with them (McEwan n.d., pp. 87-92). The above details a possible deployment of regression analysis with the question framed in one way, and the variables set up to answer the framed question in such a way as to lend itself to being adequately answered by a regression analysis. On the other hand, it is clear also from the above discussion that the framing of the question determines the appropriate research method and research design, and it is also clear that there are many ways to frame the question. The analysis above yields an answer that either affirms the correlation between the presence of hedges and the mitigation of risks, or the absence of a correlation. The analysis can be further fine-tuned by including a variable that will be held constant, so as to discount the variable as having an effect on the results. For instance, in the above framing of the question, there may be other factors that can impact the level of risks, such as the amount of money invested in a particular financial instrument, or else the timing of the purchase of the investment can have an effect on the risks associated with that financial instrument. These can be factored into the regression analysis to discount them as factors, and so come up with a definitive answer with regard to the research question for the finance dissertation. Likewise, the regression analysis method lends itself to the use of large amounts of data, so that, for instance, data over time can be collected to determine if there is indeed an impact on risks associated with the use of derivatives tied to financial instruments (McEwan n.d., pp. 87-92). Meanwhile, in the above deployment of regression analysis as the chosen quantitative research method for undertaking the finance dissertation under consideration here, there is little to no talk with regard to the selection of the sample population for the financial instruments to be considered. In the above discussion we mention only that the choice of the method for research allows us to consider a large population of financial instruments, some with derivatives attached to them, and some without. In a dissertation setup, we imagine that there would be equal numbers of financial instruments with and without derivatives or hedges attached to them, notwithstanding the total sample size. In the ideal case moreover there would be a very large sample, with no regard to the financial amount of the hedges or the derivatives. We take it that for the purposes of the regression analysis, the amount of hedging would be the same for all financial instruments, but this is just one assumption and one deployment possible for the research design among many others. On the other hand, the underlying rigor of the choice of financial instruments and the assignment of hedges or no hedges would be completely left out. Meanwhile the research tells us that in a true deployment that is rigorous and acceptable in its results, a research design ought to consider the selection process for the sample population. In the ideal scenario then the selection of financial instruments, those with tied derivatives and those without tied derivatives to them, would be completely randomized. In one implementation, financial instruments would be chosen or rejected with a toss of a coin, or with the random assignment of one or zero, with ones being chosen. In this manner, with the choice of the samples for inclusion randomized, the description of an actual deployment of regression analysis as the ideal research method for the dissertation considered here is made complete (McEwan n.d., pp. 87-92; Hopkins 2000; Ouyang n.d.). References Hopkins, Will 2000. Quantitative Research Design. SportScience 4 (1). [Online] Available at: http://www.sportsci.org/jour/0001/wghdesign.html [Accessed 12 December 2012] Jones, Peter, 2000. Chapter 3- Research Method. The Union Institute/Redesign Research. [Online] Available at: http://redesignresearch.com/pde-3.htm [Accessed 12 December 2012] McEwan, Patrick, n.d.. Quantitative Research Methods in Education Finance and Policy. Wellesley.edu. [Online] Available at: http://www.wellesley.edu/Economics/mcewan/PDF/methods.pdf [Accessed 12 December 2012] Ouyang, R. n.d. Basic Concepts of Quantitative Research. Kennesaw.edu. [Online] Available at: http://ksumail.kennesaw.edu/~rouyang/ED-research/methods.htm [Accessed 12 December 2012] Soy, Susan, 1997. The case study as a research method. University of Texas at Austin. [Online] Available at: http://www.gslis.utexas.edu/~ssoy/usesusers/l391d1b.htm Tellis, Winston 1997. Application of a Case Study Methodology. The Qualitative Report. [Online] Available at: http://www.nova.edu/ssss/QR/QR3-3/tellis2.html [Accessed 12 December 2012] Read More