Musings on Accounting Research by Steve

Home » Current thoughts » Libby Bloomfield and Nelson (2002) – using it correctly

Libby Bloomfield and Nelson (2002) – using it correctly

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If there ever was an experimental reference that was misused it has to be Libby Bloomfield and Nelson (2002) AOS.  LBN summarize and integrate the then relatively new to the modern age line of experimental research in financial accounting.  While unfortunately the key example in the first part of the paper is a retracted article, my problem lies with the misuse of the participant matching part of the paper.

It is often used to excuse using undergraduate student participants in financial accounting and tax experimental papers (and more rarely in management accounting and more rarely still in audit experiments).  Now the principle is rather straightforward – acquire participants that are appropriate to the research question being asked.  So when asking about work financial analysts do use financial analysts or analysts in training.  If looking at controller’s accounting decisions use controllers and when using investors and taxpayers – specify the type.

The last one is where problems begin.  Undergraduate students in business are at best novice investors but more often naïve investors. Ditto with many of the participant providing services (e.g. MTurk)  if careful prequalification is not done.  The problem is that rarely does an experimental issue call for naïve investors or taxpayers.  Maybe novices but almost never naïve.  Yet often young researchers will blindly quote LBN to justify the use of such participants.  A strong suggestion – reread LBN through the eyes of a reviewer and then tell me that naïve participants are good surrogates for investors and taxpayers!!!!!

Yes, there is a place to use such participants when ensuring that basic cognitive processes apply to this task environment.  But the moment you go beyond basic cognitive processes (ensuring that transfer and apply works) naïve participants are not warranted – at least without some pretty substantial corroboration of key results with more appropriate participants!  See Panel musings  for some ideas on this topic.


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