Musings on Accounting Research by Steve

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Evidence based accounting standard setting


After 45 plus years of financial accounting and auditing research one might think that we would be more systematic about conveying the broad consensus about research findings to those who set standards.

Yet while there are individual anecdotes about the influence of research on standard setting, as a research community we have not yet dealt with the fundamental communication problem of how do we package research results in as an objective manner as possible to inform standard setters.

Further, we have not as of yet developed the skills of standard setters to be able to understand what such a communication says, even if one were made.  Instead we have a culture where standard setting staff looks for individual research studies that will inform what they are doing.  Given the limits of  any one research study, they are bound to be frustrated as they cannot find “the answer.”  Of course they cannot because no one study is going to solve a problem and it certainly is not going to provide the consensus of the evidence.

Years ago (over 25) medicine had similar problems with “expert consensus” being employed  instead of the research evidence in determining treatment protocols and standards of care.    What they found in medicine was shocking – consensus leading to deaths of thousands of patients through the suggestion of inappropriate or ineffective or indeed detrimental treatment (for a more recent example see JAMA. 2000 Jul 26;284(4):483-5.).

“Expert consensus” readily translates into our world of accounting and auditing as standard setters. Fortunately, we do not cause death in accounting and auditing when standards are not based on the best available evidence – albeit we may cause “death” by misadventure in corporations and others that suffer from misclassification as being credit unworthy or failing to detect detectable fraud among other causes.

From time to time I will be turning to this theme as I truly believe we need to consider the “evidence based movement” and what it can tell us about how we can communicate better and how to teach recipients of the communications to understand what is communicated.  NOTE:  This is not the start of another “it is all our fault” polemics like we have had in the past from various “leaders” in academic accounting (e.g. Kaplan 2011).  Just like in medicine (where among accounting researchers there is the myth that doctors read original research) we have to give thought as to how to convey this information and how to educate the recipient about how to receive it.  After all, communication takes two parties who want to talk to each other.



  1. C. says:

    thanks again for this nice piece. Past experience in medicine tells us a lot.

  2. daw44 says:


    I would be interested what you think of the journals like Science and Nature that try and write a short article that is accessible to everyone, and then a longer online appendix that answers the questions of rigor (e.g., the models, data selection criteria, robustness tests, etc.). The article “to the masses” is short, written for understanding, and communicates the important points of the research. The online appendix ensures the rigor and quality. Seems like a reasonable, and relatively easy transition that we could make to start down this path.


    David A. Wood

    • Science and Nature have a lot of interesting criteria to meet in order to merit publication there. hence, the type of approach that the commenter describes seems to make sense. BUT it is very much in a particular context of the types of articles they will accept. Indeed, one of there senior editors stated in a public presentation that there are only three types of articles that XXXXX will accept. Those that bring a line of literature to an end. Those that bring out a new line of inquiry totally different from what is done before. Those that challenge “commonly accepted wisdom” in a field that might require a major rethinking of what is known in that area.

      If I applied that criteria to my own research, that would lead me to have three, maybe four publications (accounting consultations, auditor-client management negotiation, balanced scorecard assessments, audit firm error management). Most accounting academics would not even have that despite vitas that are longer then mine in some cases as new ideas, challenges to accepted wisdom and bringing a line of literature to an end are very rare in accounting research.

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