Theoretical versus Empirical Research, Descriptive versus Causal Research - Coursework Example

Name: Tutor: Title: Accounting Research Course: Date: Accounting Research Theoretical versus Empirical Research In the process of engaging in research in accounting various methodologies are applicable. Accounting research engages the use of both theoretical and empirical approaches. In the recent past theoretical research was mainly used in accounting process. However due to the limitations of the theoretical approach in accounting research empirical research has greatly influenced the accounting research process. Theoretical research has its basis on the findings of the obtainable theories and hypothesis. In this case there is lack of practical applications in terms of research. Theories may be regarded as being biased as they falsify phenomenon meaning that could be explicit through a set of observations. Thus accounting phenomenon can either be understood through the use of either theoretical or empirical research processes (Godfrey, Hodgson & Holmes 2003). The theoretical research approach relies on the existing literature in regards to accounting phenomenon. I this case theoretical approach is mainly based on the existing concepts that have been established. Therefore in accounting theoretical approach can be used in the estimation of accounting phenomenon with a high degree of confidence for the fact that the theoretical approach is verifiable in nature. In addition the theoretical approach can be substituted by other parameters or sub models to ensure its effectiveness. Despite its major use in the accounting research the theoretical approach has several limitations in its use. The approach involves the use of various complexities and in cases whereby the complexities are not well comprehended they can lead to inaccuracy and biasness in the accounting process. Theoretical research approach is therefore based on the existing theories of accounting in regards to various phenomenon (Lee, 2002). Capital markets engage in the use of theoretical approach in the accounting process. Thus capital market research has been in form of event studies and research. Through the use of the existing research and theories individuals or firms are placed at a better position in the determination of capital markets and how they can manipulate the market efficiency to their advantage. Through the use of the theoretical approach the accounting researchers are further placed at a better position in the interpretation of the market dynamics. It is therefore through the continued use of theories and research that accounting researchers are able to test the efficiency and perceived existence. Capital markets trends are also able to be analyzed fully through the use of existing theories. The theoretical approach in accounting presents the use of hypothesis with the major aim of measuring certain variables and association between different variables through the use of existing theories in order to make particular conclusions in regards to the various capital market variables under study (Beaver, 2002). Empirical approach on the other hand involves setting up of various experiments for the purpose of obtaining data in the accounting research process. Empirical research therefore has its basis on the verification of information or data through a series of experiments. The calculations are generally based on observations. The information received from the set of experiments that are undertaken assist in the process of accounting for the fact that it offers estimation in terms of equations and the link between different parameters. Empirical research is therefore based on facts in the process of explaining certain accounting phenomenon and their occurrence. Empirical statements therefore are mainly dependent on the set of observations. Hence the process of observation generally obtains the same result over time. Thus empirical research approach in accounting is never absolute in nature but statistical. Empirical approach forms an accounting phenomenon that is observed over time with statistical results being obtained (Mouck, 1992). Therefore accounting empiricists do not engage in the process of theory testing but rather conduct a series of experiments in a bid to come up with a conclusive type of data that will enable the researcher to appropriately measure the accounting variables. Thus accounting empiricists do not generate stories in the research process but engage in the use of experimental designs on various variables under research. Empirical research can be used in the process of accounting research in taxation process. In this case empirical tax research in accounting revolves around a series of experiments in order to test the results with the manipulation of various variables under study in order to cope up with desired results. There is use of calculations for the purposes of obtaining empirical data to be used in the research process. Empirical observation of the taxation process is therefore important for the purposes of coming up with empirical type of data to be engaged in the research process. Through the use of such variables such as the effects of tax capitalization and the effect of prices of explicit taxes can be engaged in the research process in order to obtain an empirical type of data for the taxation research (Hastie & Dawes 2010). Auditing is also another accounting process that empirical research can be used in its administration. The process of auditing involves a scrutiny of accounting books for the purposes of accountability and maximization of resources within a particular firm. Empiricists argue that empirical data is obtained through a series of observation. In this case the accounting books in the process of auditing are observed and the data and calculations obtained through the observation process. As opposed to the theoretical approach whereby there is the use of existing theories in the data collection process, empirical data does not engage the use of existing theories or information but rather collects the primary data through the process of observation and analysis of the variables under observation. Empirical research is credited for achieving an up to date information due to its accuracy in the data collection process. Data is also collected empirically and such aspects as science in form of calculations can be engaged in data collection and analysis. This implies that any conclusions that are made are based upon concrete type of evidence that is collected through the use of real life experiences for instance the accounting books in auditing process (Zimmerman, 2001). Descriptive versus Causal Research Descriptive research involves a situation whereby the researcher is aware of what needs to be studied and where to find the solutions. In this case secondary data and literature review is readily available. Descriptive is mainly used in situations whereby the researcher wants to research on a specific in the accounting process and therefore sets parameters in the data collection process. This therefore ensures that the data collected is specific to the phenomenon under research. Thus a descriptive research engages in the collection of specific types of data in a bid to describe a particular accounting phenomenon. In this type of research theory is not engaged in the data collection process but specific information that describes a certain accounting phenomenon is engaged in data collection process. The descriptive research methodology has greatly dominated the accounting world (Hastie & Dawes 2010). A descriptive theory has the main objective of illustrating the actual occurrence in accounting practice. An example of a descriptive accounting research would involve capital market research. Within the capital market research process the conceptualization of the capital market enalysis is described as the vents within the capital market unfolds. The variables within the capital market accounting process are therefore described as they occur. The actual happenings of the capital market are incorporated in the accounting process through the definition and explanations of various variables that are used in the capital market accounting process. Due to the fact that the descriptive theory describes and explains the actual happing of an accounting event the capital market forms the best example to be engaged in the descriptive accounting approach (Zimmerman, 2001). Causal research on the other hand is similar to the descriptive research for the fact that it employs data that the researcher is aware that it is essential to measure in advance. However causal research does not only engage in collecting specific data that the researcher wants to prove or disapprove a theory. Therefore in the process of causal research there is need for correlations or associations between two or more variables to be indicated. This association between variables plays an important role in accounting research in general. The prevalent disadvantage of causal research is to make assumptions that if the researcher finds two or more variables that are correlated with each other that one must cause the other. It is always important to note that Correlation is not always causation. Hence an excellent causal research engages a variety of controls that are variables that the researcher incorporates in a model with the aim of eliminating alternative explanations. Causal research can use either an experimental or an observational research design. This involves the fact that the variables under research can either be observed with the aim of collecting data without any form of modifications. The observations can therefore be made in form of surveys whereby the various variables are observed without making any alteration in the research process (Watts & Zimmerman 1990). Causal reasoning theories for instance can be used in the generation of securities and exchange in the accounting process. This is due to the fact that one variable is dependent on the other and therefore both variables enjoy a causal type of relationship or association. Causal research can also be used in by investors in the process of making particular financial predictions. This is due to the fact that the financial investments are dependent on certain factors. The various factors within the financial investment are linked to each other and dependent on each other for various reasons. Causal research forms an important part in the study of the various causal relationships within the variables under researcher to ascertain the level or degree of dependency and linkages (Salterio, 2010). References Salterio, S. 2010, Contemporary Accounting Research: 2010 Editor’s report. Available at http://www.caaa.ca/CAR/EditorRpt/index.html Watts, R.L and J.L. Zimmerman, 1990, Positive accounting theory: A ten year perspective. The Accounting Review. 65 (1): 131-156. Zimmerman, J.L. 2001, Conjectures regarding empirical managerial accounting research. Journal of Accounting and Economics. 32: 411–427 Hastie, R., & Dawes, R. ,2010, Rational choice in an uncertain world Thousand Oaks, CA: Sage. Godfrey, J, A Hodgson and S Holmes, 2003, Accounting Theory, (5 ed), Milton, John Wiley & Sons Australia Ltd. Beaver, W H., 2002, “Perspectives on Recent Capital Market Research”, The Accounting Review v 77, pp 453-474. Lee, C M C.,2002, “Market efficiency and accounting research: a discussion of ‘capital market research in accounting’ by S P Kothari”, in Kothari et al (2002), pp I 233-253. Mouck, T.,1992, “The Rhetoric of Science and the Rhetoric of Revolt in the ‘Story’ of Positive Accounting Theory”, Accounting, Auditing and Accountability Journal, pp 35-56. Read More