Chapter 1: The Nature of Accounting Research Board (FASB) when creating or revising

accounting standards (e.g., IFRS,

GAAP).
1.1 What is Accounting Research?
• Educating and Training:
Accounting research is the systematic, Academic research ensures that future
objective, and scientific process of accountants are trained based on the
investigating issues, practices, policies, and latest theories, tools, and real-world
theories in the field of accounting. challenges.
It seeks to:
• Supporting Decision-Making:
• Develop new knowledge in accounting, Good research provides data-driven
auditing, taxation, and financial insights that help companies plan,
reporting. control, and make financial decisions
effectively.
• Improve existing practices and
standards. • Driving Innovation:
Research pushes boundaries, exploring
• Solve practical financial problems
how new technologies (e.g.,
encountered by businesses,
blockchain, AI) can be applied in
governments, and individuals.
accounting.
Unlike casual observation or guesswork,
1.3 Scope of Accounting Research
accounting research relies on careful
planning, data collection, analysis, and The scope of accounting research is broad
interpretation. and multidisciplinary.
It uses empirical evidence (data from real- It covers all areas where accounting
world observations) and logical reasoning to information is used or produced:
ensure that conclusions are credible and
Area of Research Focus Topics
reliable.

1.2 Importance of Accounting Research Measurement, reporting

Financial standards, disclosure
Accounting research is not only for academics Accounting practices, financial
— it plays a crucial role in real-world finance statement analysis.
and economics.
It matters because: Audit quality, fraud
detection, internal
• Improving Practice: Auditing
controls, risk assessment
Research helps refine accounting
methods.
techniques, making financial reporting
more accurate, transparent, and useful
Budgeting, costing
to stakeholders (e.g., investors,
Management methods, performance
regulators).
Accounting evaluation, strategic
• Influencing Policy and Standards: decision-making.
Research findings often influence major
Tax compliance, tax
accounting bodies like the International
Tax Accounting policy, planning strategies,
Accounting Standards Board (IASB) or
effects of tax regulations.
the Financial Accounting Standards
Area of Research Focus Topics improve their internal control
systems to prevent fraud.
Reporting for public
Government and By Approach:
agencies, accountability
Nonprofit
and transparency • Exploratory Research:
Accounting
standards.
o Conducted when there is little
Use of technology (ERP existing information about a
Accounting
systems, blockchain, topic.
Information
cybersecurity in
Systems o Aims to discover ideas and
accounting).
insights, laying groundwork for
more detailed studies.
Teaching strategies,
Accounting curriculum development, • Descriptive Research:
Education learning outcomes for
accounting students. o Focuses on describing the
characteristics of a population or
Because accounting influences and is a phenomenon.
influenced by law, economics, business, and
o Example: Describing common
technology, research often crosses into these
financial reporting practices
fields too.
among nonprofit organizations.

• Explanatory (Causal) Research:

1.4 Types of Accounting Research
o Seeks to identify relationships
Danny Araneta Cabulay highlights different between variables — for
types of research based on purpose and instance, how audit tenure
approach: affects audit quality.

By Purpose: Each type of research plays a role depending

on the stage of knowledge about a topic.
• Basic (Pure) Research:

o Seeks to expand general

knowledge without necessarily 1.5 The Research Process in Accounting
aiming for immediate
Research is not random — it follows a
application.
structured process, firstly:
o Example: Developing a new
1. It identifies the Research Problem:
theory about how managers
manipulate earnings during o Pinpointing a relevant issue
mergers. based on observation, gaps in
literature, or emerging practices.
• Applied Research:
2. Reviewing Related Literature:
o Designed to solve specific,
practical problems. o Studying existing books, journals,
articles to build a theoretical
o Example: Studying how SME(small
background.
medium enterprises)s can
 3. Formulating Research • Reliable:
Questions/Hypotheses: If repeated, the same methods would
produce similar results.
o Clear, focused questions that the
study aims to answer. • Relevant:
The study must address an important
4. Choosing the Research Design:
issue that contributes to accounting
o Deciding whether to use knowledge or practice.
qualitative, quantitative, or mixed
• Ethical:
methods.
Research must respect participants'
5. Collecting Data: rights, cite sources properly, and report
findings honestly.
o Gathering information
systematically (surveys, financial
statements, interviews, etc.)
1.7 Examples of Research in Accounting
6. Analyzing Data:
To better understand, here are examples of
o Using statistical or qualitative real-world accounting research topics:
methods to interpret the results.
Research Area Example Study
7. Drawing Conclusions and Making
Recommendations: Analyzing the impact of IFRS
(International Financial
o Summarizing findings and Financial Reporting Standards)
suggesting practical or Reporting adoption on the
theoretical applications. comparability of financial
8. Writing and Presenting the Research statements.
Report:
Investigating how audit firm
Auditing
o Structuring and presenting the size affects audit quality.
study to communicate the
findings effectively. Studying the effects of tax
incentives on SMEs' (Small &
Taxation
Medium Enterprises) financial
1.6 Characteristics of Good Accounting performance.
Research
Exploring the use of
Good accounting research is not just about Management balanced scorecards in
gathering data — it must meet high standards: Accounting Philippine manufacturing
firms.
• Systematic:
It follows a clear, logical sequence of Assessing the effectiveness of
steps. Accounting case-based teaching
• Objective: Education methods in accounting
It remains neutral and unbiased; classes.
personal opinions should not interfere
with evidence.
Each of these topics uses research to enhance Raghunandan, 2020, Journal of
understanding, solve problems, or create Accounting and Ecobomics, Volume 69,
innovations in the field. Issues 2-3)

• Why is record retention important?

o What records should be retained?
Formulating the Statement of the Problem
o How long should documents be
Defining and stating clearly the specific retained?
research problem is the heart of any academic o What should be done with
accounting research — the main focal point of electronic records?
the entire report or manuscript. It should not be o How should records be disposed
ambiguous and broad or else it will pose many appropriately and responsibly?
challenges to both the researcher and the
(Keep or Toss? A Guide to CPA Firm
readers.
Record Retention by Jamie Yoo, 2020,
In some instances, one research project or Journal of Accountancy)
undertaking may have more than one research
problems. These problems have to be ranked
according to priority and level if importance. Remember
Thus, the main research problem should come
The SOP is essentially linked to the title of the
first followed by the secondary or tributary
research report, thesis, dissertation, or study. It
problems which must be related to the first.
cannot digress from the main title of the
Ideally, the statement of the problem (SOP) is research hypothesis. All succeeding parts of the
expressed in interrogative form (or question research report should be directly linked to the
form). Herewith are examples of good research SOP. For example, a critical review of significant
problems, along with their secondary problems related literature and studies, the research
stated appropriately for academic accounting instruments, the findings, conclusions and
research. recommendations are all necessarily linked to
the SOP. In the final analysis, did the findings,
• What is the effect of proactive financial
conclusions and recommendation answer or
reporting enforcement on equity values?
address the main research problem and its
secondary problems?
(Proactive Financial Reporting
Enforcement and Shareholder Wealth ny
Hans Christensen, Lisa Yao Liu and Mar
Hypothesis
Maffett, 2020, Journal of Accounting and
Economics, Vol. 69, Issues 2 -3) The research hypothesis is an intelligent
assumption made by the researcher leading to
• Does audit fee discounting impair the the answer to the research problem.
quality of audit?
The three main parts of a hypothesis are: (a) null
o What is the prevalence of audit
hypothesis statement; (b) hypothesis expression
fee discounting in initial year audit
(or formula); and (c) the legend for easy
engagements?
reading and interpretation.
(Are Audit Fees Discounted in Initial Year
Below are examples of hypotheses for
Audit Engagements? by Abhijit Barua,
academic accounting research.
Clive Lennox and Aneesh
Null Hypothesis: The mean of monthly ratios of • The aforementioned scope and
selected firms in the BPO less than or equal to delimitations were brought about
12.00. primarily by budget, time, and find
network constraints.
Alternative Hypothesis: The mean of monthly
ratios of selected firms in the BPO industry is
greater than 12.00
Significance of the Study
where;
The significance of a specific research project
𝐻0 = null hypothesis refers to the benefits accruing to various
stakeholders and its potential contribution to
𝐻𝑎 = alternative hypothesis
the researcher’s work, profession; or business; a
particular unit in the organization; the industry
government agencies; the country; and the
Scope, Delimitations, and Limitations
region or the world.
Scope refers to the general coverage of the
study defining clearly the parameters for
inclusion and consideration. Meanwhile, Definition of Terms and Acronyms
delimitation refers to the physical, economic,
Two types of definitions:
legal and technical limitations of the study—
identifying the exclusions. Limitation basically (a) lexical definition/conceptual definition –
answer the question. one must cite the source but not
Wikipedia
(b) operational definition – or functional
Below is the sample research title tackling a definition of the researcher.
critical issue in the procurement function of the
shipping industry, its respective scope,
delimitations and limitations.

Comparative Analysis of the Competitiveness of

the Philippines and Selected Asia Pacific
Countries as Supplier of Food Provisions for
International Vessels by Randy Alday

• This study included all types of vessels

(e.g., tankers, cargo ships, cruise ships,
etc.) plying the Asian Pacific route. It is
focused only on food supply provisions of
the types of vessels. While there are
many countries actually supplying
oceangoing vessels in the said route, this
study focused mainly on four countries or
territories (i.e., Singapore, Hong Kong,
China (Port of Shanghai), and the
Philippines.) Data gathered are pertinent
only to 2013 and 2014.
Research Philosophy and Paradigm (Theoretical An example is an institutional analysis of the
and Conceptual Frameworks) evolution of land use planning.

Research Philosophy is a system of the 3. Structuration Theory. This draws on the

researcher’s thought following which new structuration theory of Anthony Giddens
reliable knowledge about the research object which seeks to explain accounting practices
is obtained. as an interaction between an individual
capability to make choices, and which are
Theoretical Framework. The research must be
reproduced through individual behavior.
grounded or anchored in important theories,
concepts, or models. One may use a classical
An example is a study on the predictors for
theory or modern theory.
successful mergers in the banking industry.
This demonstrates an understanding of theories
and concepts that are relevant to the topic of 4. Foucauldian Theory. This research is
one’s research paper and that relate to the influenced by Michael Foucault wherein
broad areas of knowledge being considered. one sees accounting practices as
dependent on historical circumstances and
The theoretical framework strengthens the study
as tools for disciplining individual behavior.
in the following ways:
An example is a study of money laundering
▪ It permits the reader to evaluate
schemes in the Philippines.
theoretical assumptions critically.
▪ It connects the researcher to existing 5. Latourian Theory. This research is influenced
knowledge and provides a basis for by Bruno Latour, which is concerned with
formulating the hypotheses and choice understanding accounting technologies in
of research methods. the context of networks of human and
▪ It permits the reader to intellectually nonhuman “actants”.
transition from simply describing a
phenomenon observed to generalizing An example is the use of special software to
various aspects of that phenomenon. detect fraudulent activities in a group of
companies.

1. Agency Theory. This types of research 6. Linguistic Theory. This type of research sees
seeks to explain and predict accounting accounting as a discursive practice, which
practices related to the principal-agent draws on linguistic theory and hermeneutics.
relationship between shareholders and
managers, including issues related to An example is a study on the practice of
information asymmetry and moral constructive accounting applied to micro
hazard. and small enterprises.

An example is a study examining the link

between executive compensation and Remember!
shareholder returns.
From this theory, the researcher develops
his/her own conceptual framework. This will also
be the basis for selection of related literature
2. Institutional Theory. This focuses on
and studies.
socially generated rules that structure
accounting practices in organizations.
Fundamental Research Process ▪ Rightsizing another product of
accounting research which refers to the
Research is meant to solve problems or address
process of making a company or
issues in an organization (or any of its units),
organization a more effective size,
community, industry, profession, country,
especially by reducing the number of
region, or the world.
people working for it.
✔ First step. It starts or begins with the
identification of a specific problem, concern, or
issue that needs to be resolved. It is vital that the
identified research is the correct one, otherwise
the whole undertaking will be an exercise in
futility.

✔ Second step. Determine the methodology to

pursue in searching for answers to the said
problem. Data gathering as well as data
analysis provide research with a sea of options
to assess.

✔ Third step. Is the formulation of the options to

pursue. These options need to be assessed carefully
and in a scientific manner using a logical and well-
thought-out criterion.

✔ Fourth step. To select the most feasible solution

to the problem which is incorporated in the
conclusions and recommendations section of the
report. This must essentially include the
implementation rules and guidelines.

✔ Final step. To validate the recommended solution.

Prior to implementation, any proposed solution
must be evaluated systematically, discussed
extensively, and critiqued and objectively to ensure
that all loopholes are plugged.

APPLICATIONS OF ACCOUNTING RESEARCH

There are several examples of accounting

research both in the academe and professional
practice. Such as the terms,

▪ Offshore outsourcing is the practice of

hiring an external firm to perform some
business functions.
▪ Payroll accounting