Musings on Accounting Research by Steve

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Missing the main effects – not a story about experiments

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Some techie observations will big implications for our research!  From strange but true research articles in accounting!

  • Focusing on a 0.3 % (0.003) increase in likelihood of restatements in a cross- sectional pooled article about the SOX time period while avoiding mention that during that period the number of restatements declined by more than half (50%)
  • Focusing on hedge strategies that worked prior to their being revealed in academic research in pooled cross- sectional data over 30 years.  yet ignoring the fact that once the research identifying them was published the consistency of the hedge returns occurring and the significance of them economically is radically smaller.

It seems to me that cross- sectional pooling of data increases the chances of forests being missed while the growth of saplings is emphasized!

I ask:

Just because everyone else is pooling should you?

Should editors require pooled data to be broken out into annual cross- sections to keep claims “honest?”


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