Research Methods accounting - Chapter 2.pptx

Accounting and Finance company

1. ACFN 3111- Research Methods in Accounting & Finance Chapter II Formulation of the Research problem

2. Contents of the lecture 2.1 What is Research Problem 2.2 Hypothesis Formulation 2.3 Process of Testing Hypothesis

3. Introduction Previous discussions provided general perspectives and understanding about research. Definition of research, Its role and purpose in the quest for knowledge generation and understanding, The scientific method and ways of reasoning, Ethical considerations, etc. But, they did not provide guidance on how to do the research. Some of the critical elements of the research process are discussed in this part.

4. The research process Research can be broken down into a series of steps that are interrelated and are sometimes revisited in an iterative fashion. In other words, the research task is usually a sequential process involving several clearly defined steps. i.e., from the formulation of a general idea to actual data collection, and interpretation of the results and conclusions.

5. The research process There are some conventionally acceptable standards that should be achieved in order to gain credibility. Some researchers portray the steps in a linear form while others put them in a cyclical form. Begin but never ending/Begin and end

6. The research process The conventional steps involved in the research process are: Selecting a research topic formulating the research problem with focus on the main research questions Literature survey Preparing the research design and determining the sample design and sample size Collecting and analyzing the data Generalizations and interpretations of results Preparing the report and presentation of the results

7. The research process In short : once a research idea is identified the research process involves: Review of literature – new research is based on a huge legacy of previous work . Understanding the nature of data –a good understanding of the nature of data is required in order to be able to collect and analyze it.

8. The research process Sampling – it is rarely possible to include every body or everything in your research. How you select the sample is crucial to the credibility of your research. Collecting data – a wide choice of collection methods are available from which you can choose the methods which are appropriate for particular types of investigation.

9. The research process Analyzing data – what you do with the data after you have collected it depends on the analytical methods you adopt. Writing up – and presenting your research and findings in a way that convinces others. Ethics –When doing research you need to take into account all ethical issues to make sure that you do no harm.

10. The eight-step model for carrying out research PHASE I DECIDING WHAT TO RESEARCH Step I Formulating a research problem PHASE II PLANNING A RESEARCH STUDY Step II Conceptualising a research design Step III Constructing an instrument for data collection Step IV Selecting a sample Step V Writing a research proposal PHASE III CONDUCTING A RESEARCH STUDY Step VI Collecting data Step VII Processing and displaying data Step VIII Writing a research report The research process

11. Steps in formulating a research problem If you do not know what specific research topic, idea, questions or issue you want to research (which is not uncommon among students), first go through the following steps: Step 1 Identify a broad field or subject area of interest to you . Step 2 Dissect the broad area into subareas. Step 3 Select what is of most interest to you . Step 4 Raise research questions . Step 5 Formulate objectives . Step 6 Assess your objectives . Step 7 Double-check. Defining the research problem and objectives

12. In business research problem-definition process involves several interrelated steps: Understand the business situation—identify key symptoms Identify key problem(s) from symptoms Write managerial decision statement and corresponding research objectives Determine the unit of analysis (i.e. source of data: individuals, households, organizations, geographical areas, or objects such as products, advertisements) Determine the relevant variables Write research questions and/or research hypotheses Defining the research problem and objectives

13. Identification of a Research Topic/Problem The first step in the research process is to find an idea for a research study. i.e. formulating and clarifying the research topic is the starting point of your research project Capture the essence of the research in a “nutshell” Meaning deciding on the topic of the research and finding a question which may be, an unresolved controversy, or simply a gap in knowledge within the chosen subject.

14. This is probably the most difficult, and yet the most important, part of your research project. Without being clear about what you are going to research it is difficult to plan how you are going to research it. Once you have done this you will need to turn the idea into research questions and objectives and to write the research proposal for your project Identification of a Research Topic/Problem

15. Identifying a research topic typically involves two steps: First, selecting a general topic area, The general topic area is simply the starting point that eventually will evolve into a very specific research question. You need to find an interest in a broad subject area (problem area). Identification of a Research Topic/Problem

16. Second, reviewing the literature in that general area to find a specific research questions. This process will enable you to: Narrow the idea to a plausible topic. Question the topic from several points of view, and Define a rationale for your project. As you read through the research literature, you will become familiar with the current state of knowledge and can determine what questions are still unanswered. Identification of a Research Topic/Problem

17. Generally, there are three types of research titles: Indicative title: they state the subject of the research rather than the expected outcomes. Example : The role of agricultural credit in alleviating poverty in a low-potential areas of Ethiopia. Identification of a Research Topic/Problem

18. Hanging titles have two parts: a general first part followed by a more specific second part. Example : ‘Alleviation of poverty in low-potential areas of Ethiopia: the impact of agricultural credit’. Question-type titles are used less commonly than indicative and hanging titles. Example : ‘Does agricultural credit alleviate poverty in low-potential areas of Ethiopia?’ Identification of a Research Topic/Problem

19. Where do research topics come from? Identification of a Research Topic/Problem

20. There is no set formula for the identification of a topic of research. In principle a topic must spring from the researcher’s mind like a plant springs from its own seed i.e . it should be generated by the researcher Identification of a Research Topic/Problem

21. Ideas for a research topic can come from a variety of sources including: everyday experiences, books, journal articles, or class work. The best way to identify a topic is to draw up a shortlist of possible topics that have emerged from your reading or from your own experience that look potentially interesting. A general area of interest or aspect of a subject matter (accounting, finance, industry, social sector, etc.) may have to be identified at first. Identification of a Research Topic/Problem

22. The best guide is to conduct research on something that interest you. Accounting software or systems Accountants role Risk and risk management Social and environmental accounting Japanese and lean manufacturing accounting MA theories and practices Strategic management accounting Capital budgeting Budgetary control Management control systems Cost management Performance measurement and rewards, etc. Identification of a Research Topic/Problem

23. Generated by the researcher . Own professional experience is the most important source of a research problem. choose a topic in which if possible, already have some academic knowledge. For instance, some researchers are directly engaged in program implementation and come up with a topic based on what they see is happening. attending conferences, seminars, and listening to professional speakers, etc. are all helpful in identifying research problems. Identification of a Research Topic/Problem

24. B) Examining the literature Examining the theoretical or em pirical literature in your specific field. Published articles are excellent sources of ideas. They help to… Explore findings discovered in previous research. Identify suggestions an author gives for further research at the end of an article. Extend an existing explanation or theory to a new topic or setting. Challenge findings or attempt to refute a relationship. Identification of a Research Topic/Problem

25. C) Provided by a client Requests For Proposals (RFPs ) are published by government agencies, NGOs and some companies. They describes the problem that needs to be addressed, the contexts in which it operates, the approach they would like you to take, and the amount they would be willing to pay for such research - they are virtually handing the researcher an idea. Identification of a Research Topic/Problem

26. But, if the topic is something in which you are not interested you will have to weigh the advantage against the disadvantage of a potential lack of personal motivation. d) Technological and Social Changes New developments bring forth new development challenges for research. E) Looking at Past Project Titles Scanning your university’s list of past project titles for anything that captures your imagination Identification of a Research Topic/Problem

27. F) Scanning the Media Keeping up to date with items in the news can be a rich source of ideas. The stories which occur everyday in the newspapers G) Discussion and Brainstorming Colleagues, friends, practitioners and university tutors are all good sources of possible project ideas. Identification of a Research Topic/Problem

28. The most fundamental rule of good research is to investigate questions that sincerely interest you. i.e. research which a researcher honestly enjoys even if he/she encounters problems frustrating or discouraging. The research process can be a long term, messy and demanding enterprise. Identification of a Research Topic/Problem

29. Without motivation, it is very easy for a researcher to get tired or bored and give up before the research is completed. Subject which is overdone, should be avoided by the average researcher since it will be difficult to throw any new light in such cases for the average researcher. Identification of a Research Topic/Problem

30. So, choose a worthwhile issue which is New Catchy Focused Non-obvious conclusion You can get the data Doable Identification of a Research Topic/Problem

31. Remember : Keep Track of References Any literature cited must be listed properly in a References section. Record the full references as you go! Author, title, journal name, volume and date, page numbers, book publisher & location, date Always record page numbers. Give page numbers for all information, not just quotations. Identification of a Research Topic/Problem

32.   Example 1 Example 2 Topic Employee retention Finance Research problem Effect of new career-break scheme in Firm A on the recruitment and retention of skilled staff Access to finance for small firms Research question How has the new career-break scheme contributed to employment in Firm A? How do small firms meet their needs for finance (in a particular industry, geographical location, time period, etc.)? 33 Examples of topics, research problems and related research questions Identification of a Research Topic/Problem

33. Identification of a Research Topic: Examples of research problems Communication methods – The effectiveness of public service announcements for communicating with students Corporate governance – How corporate governance can be extended to employee communications Environmental issues in manufacturing – Influence of ‘green’ factors on supplier selection in the manufacturing sector Financial accounting in the National Health Service – The use of financial accounting by doctors in general practice Financial reporting – The most effective way of communicating financial information to stakeholders Gender issues in employment – The effect of career-break schemes on the recruitment and retention of skilled staff 34

34. Attributes of a good research topic/problem Your research topic must be something you are capable of undertaking it and one that excites your imagination. Capability implies that: you feel comfortable that you can develop, the skills that will be required to do the research.

35. Attributes of a good research topic/problem Capability also means you must be reasonably certain of gaining access to any data you might need to collect. Many people start with ideas where access to data will prove difficult. It is also important that the issues within the research are capable of being linked to theory . As a consequence you will need to have a knowledge of the literature and to undertake further reading as part of defining your research questions and objectives.

36. Attributes of a good research topic/problem Your ability to find the financial and time resources to undertake research on the topic will also affect your capability. Some topics are unlikely to be possible to complete in the time allowed by your course of study. For example : topics that are likely to require you to travel widely or need expensive equipment should be disregarded unless financial resources permit.

37. Attributes of a good research topic/problem Another attribute of a good topic is having clearly defined research questions and objectives . These will enable you to assess the extent to which your research is likely to provide fresh insights into the topic. Finally, it is important to consider your career goals. If you wish to become an expert in a particular subject area or industry sector, it is sensible to use the opportunity to develop this expertise.

38. Capability: is it feasible? Do you have, or can you develop within the project time frame, the necessary research skills to undertake the topic? Is the research topic achievable within the available time? Will the project still be current when you finish your project? Is the research topic achievable within the financial resources that are likely to be available? Are you reasonably certain of being able to gain access to data you are likely to require for this topic? Attributes…research topic/problem: Summary

39. Appropriateness: is it worthwhile? Does the topic fit the specifications and meet the standards set by the examining institution? Does your research topic contain issues that have a clear link to theory? Are you able to state your research question(s) and objectives clearly? Will your proposed research be able to provide fresh insights into this topic? Are the findings for this research topic likely to be symmetrical: that is, of similar value whatever the outcome? Attributes…research topic/problem: Summary

40. Fulfilment Does the research topic really interest and motivate you? Will the research topic help towards the achievement of your future aspirations or career goals? Attributes…research topic/problem: Summary

41. The problem of the research, which had been stated in general terms, is now made specific through Research Questions. A research question /s is a question that provides an explicit statement of what it is the researcher wants to know about. force you to consider the issue of what it is you want to find out about precisely and rigorously. express the research objectives in terms of questions that can be addressed by research. asking a research question serves to narrow your focus on the topic of interest. Research Questions-Turning research ideas into Research Questions

42. Research question/s… stem from the aims, purposes and objectives of the research. turn a general purpose or aim into specific questions to which specific, data-driven, concrete answers can be given. is the process of operationalization of the aims and purposes into research questions. the answers to the research questions can provide some of the ‘deliverables’. must be aligned with the aims and objectives of the research. Research Questions-Turning research ideas into Research Questions

43. In terms of specificity , a research question rests in the middle between a theory, which is very broad, and a hypothesis, which is very precise. Theories are general statements and research questions are mid- level statements, hypotheses are specific predictions about what will happen according to the theory. Research Questions-Turning research ideas into Research Questions

44. Developing research questions is a matter of narrowing down and focusing more precisely on what it is that you want to know about. If you do not specify clear research questions, there is a great risk that your research will be unfocused, that you will be unsure about what your research is about, and unsure about what data you are collecting data for, etc. Research Questions-Turning research ideas into Research Questions

45. So, research questions will: guide your literature search; guide your decisions about the kind of research design to employ; guide your decisions about what data to collect and from whom; guide your analysis of your data; stop you from going off in unnecessary directions; and provide your readers with a clearer sense of what your research is about Research Questions-Turning research ideas into Research Questions

46. Many studies may have: one research question that asks for descriptive data, together with another that asks for explanations (causal – why – or ‘how’ questions), together with a third that asks for the implications/ recommendations that derive from the answers to the preceding two research questions, moving from description to analysis/explanation to evaluation/implications/recommendations, i.e. three research questions. Research Questions-Turning research ideas into Research Questions

47. Or the research questions may comprise : a question that asks for descriptive data (what , who, where, when); followed by a question that requires comparisons, differences, relations to be drawn ; followed by a question that asks ‘so what ?’ ( implications and recommendations). Research Questions-Turning research ideas into Research Questions

48. What is a research problem/gap? refers to any difficulty, which a researcher experiences in the context of either a theoretical or practical situation and wants to obtain a solution for. i s the first step and the foundation or the heart of every research process. o ccurs when there is a difference between the current state of conditions and a more preferable set of conditions. Defining the research problem and objectives

49. Defining the research problem and objectives Statement of the Problem Problem definition (problem statement) is a clear and precise statement of the question or issue to be investigated. Problem statement is: a clear statement about an area of concern, a condition to be improved upon, a difficulty to be eliminated, or a troubling question that exists in scholarly literature, in theory, or within existing practice.

50. Defining the research problem and objectives Defining a problem clearly: involves the task of laying down the boundaries within which a researcher shall study the problem. is more important than its solution, i.e. a problem clearly defined is a problem half solved. will help to find answers to questions like: What data are to be collected? What characteristics of data are relevant and need to be studied? What relations are to be explored? What techniques are to be used for the purpose?

51. Defining the research problem and objectives Hence, in the definition of the problem you are required to describe: the background of the study, its theoretical basis and the underlying assumption, the specific and workable questions, and an explanation of why it is important or significant, and what advantage (i.e. to society or to other researchers) the research may deliver.

52. Defining the research problem and objectives The problem statement should make a convincing argument that there is insufficient knowledge available to explain the problem. The problem definition should also provide a brief overview of the literature and research done in the field related to the problem and of the gaps that the proposed research intends to fill.

53. Defining the research problem and objectives The problem statement may focus on: Identifying a Gap : A research gap is an area where no or little research has been carried out. Raising a question : The research problem is defined by asking a question to which the answer is unknown, and which you will explore in your research.

54. Defining the research problem and objectives Continuing a previously developed line of enquiry. Building on work already done, but taking it further (by using a new sample, extending the area studied, taking more factors into consideration, taking fewer factors into consideration, etc.). or Counter-claiming: here a conflicting claim, theory or method is put forward.

55. The research objectives Objectives of the study: is the researcher’s version of the research problem is the step of rephrasing the problem into operational or analytical terms, i.e. to put the problem in as specific terms as possible. are generally taken as evidence of the researcher’s clear sense of purpose and direction.

56. The research objectives Objectives of the study:… These research objectives are the deliverables of the research project. Should be written as a statement regarding an action to undertake, using the word “to” (e.g. “to discover…,” “to determine…,” “to ascertain…,” “to establish…” etc.)

57. The research objectives Objectives should be listed under two headings : Main/general objectives; sub objectives. The general objective provides a short statement of the specific goals pursued by the research. Using the general focus of your research question you will develop a set of research objectives. is the purpose of the research, expressed in measurable terms; the definition of what the research should accomplish.

58. The research objectives The specific objectives are the objectives against which the success of the whole research will be judged. are the basis for the research design. list of the specific activities to be performed. are operational and indicate the type of knowledge to be produced, audiences to be reached, etc.

59. The research objectives

60. Example: General objective/problem : To explain the determinants of audit fees in the public and private sectors of Ethiopia. Specific objective/Sub-problem 1 . To provide evidence on the determinants of audit fees paid by public sector organizations to their external auditors. Specific objective/Sub-problem 2 . To provide evidence on the determinants of audit fees paid by private sector organizations to their external auditors. Specific objective/Sub-problem 3 . To compare the determinants of audit fees in the public and private sector organizations to discern any pattern of variation/association in audit pricing and explain why. The research objectives

61. Following are four key characteristics of subproblems. Each subproblem should be a completely researchable unit. A subproblem should constitute a logical subarea of the larger research undertaking. Each subproblem must be clearly tied to the interpretation of the data. Just as is true for the main problem, each subproblem should involve interpretation as well as collection of data . The subproblems must add up to the totality of the problem. The old axiom that the sum of the parts equals the whole applies here. Subproblems should be small in number. If the main problem is carefully stated and properly limited to a feasible research effort, the researcher will find that it usually contains two to six subproblems. The research objectives

62. The research objectives The objectives must be SMART : Specific . What precisely do you hope to achieve from undertaking the research? Measurable . What indicators will you use to determine whether you have achieved your objectives? Achievable . Are the targets you have set for yourself achievable given all the possible constraints? Realistic . will you have the energy to complete the research on time? Timely . Will you have time to accomplish all your objectives in the time frame you have set

63. The Literature Review Scientific research is a collective effort of many researchers who share their results. So, a literature review is based on the assumption that knowledge accumulates and that we learn from and build on what others have done. Hence, the researcher should undertake an extensive survey of the literature related to the problem. Its function is to review—to “look again” at (re + view)—what others have done in areas that are similar, though not necessarily identical to, one’s own topic of investigation.

64. The Literature Review You should remember that others have also conducted research that is related to the topic. i.e. current studies build on previous studies. By fully acknowledging the research of others you will avoid charges of plagiarism and the associated penalties. Reviewing the literature critically will provide the foundation on which your research is built.

65. The Literature Review The purpose of the literature survey is: to provide the researcher with an understanding of the literature as it relates to the current project; to enable the researcher to learn from the efforts of others; to help refine further the research question(s) and objectives; to highlight research possibilities that have been overlooked in research to date;

66. The Literature Review to summarize the results of previous research and lay the foundation of your own research; to help you to avoid simply repeating work that has been done already; to provide insight into research approaches, strategies and techniques that may be appropriate to your own research question(s) and objectives.

67. The Literature Review The purpose is not to provide a summary of everything that has been written on your research topic. But to review the most relevant and significant research on your topic. You will need to demonstrate that you are familiar with what is already known about your research topic.

68. The Literature Review Where to find the Research Literature The literature sources can be divided into three categories: primary (published and unpublished), secondary , and tertiary . Primary sources for instance, include: published sources such as reports and government publications such as planning documents – unpublished sources such as letters, memos and committee minutes, proceedings, etc.

69. The Literature Review: summary As a researcher, you should ultimately know the literature related to your topic very, very well . An extensive literature review has many benefits: It can help you ascertain whether other researchers have already addressed and answered your research problem or at least some of its sub problems. It can offer new ideas, perspectives, and approaches that may not have occurred to you. It can inform you about other individuals who conduct work in this area—individuals whom you may wish to contact for advice or feedback. It can alert you to controversial issues and gaps in understanding that have not yet been resolved—issues and gaps you might address in your own work.

70. The Literature Review: summary It can show you how others have handled methodological and design issues in studies similar to your own. It can reveal sources of data you may not have known existed. It can introduce you to measurement tools that other researchers have developed and effectively used. It can help you interpret and make sense of your findings and, ultimately, help you tie your results to the work of those who have preceded you. It can bolster your confidence that your topic is one worth studying, because you will find that others have invested considerable time, effort, and resources in studying it. D efines the field of the research.

71. indicates the ‘state of the art’ in the field chosen; sets out the context – temporal, spatial, political etc. – of the research; identifies seminal and landmark ideas and research in the field; establishes and justifies the need for the research to be conducted, and establishes its significance and originality; sets out a rationale for the direction in which the study will go; establishes and justifies the methodology to be adopted in the research; establishes and justifies the focus of the research; sets out and justifies the warrants to be used in the research design. The Literature Review: summary

72. The Literature Review Secondary literature sources such as books and journals. They are easier to locate than primary literature as they are better covered by the tertiary literature. Tertiary literature sources, are designed either to help to locate primary and secondary literature or to introduce a topic - ‘ search tools ’ They include indexes and abstracts as well as encyclopedias and bibliographies.

73. The Literature Review In general, the following are the main sources: Computer: online and internet based sources-Google, Web Pages, JSTOR , Econlit, etc. Books and Bibliographic indexes, Dissertations and theses, Government documents, Policy reports and presented papers, conference proceedings, magazines, etc. Usually one source leads to the next.

74. Types of Literature Reviews 1. Context reviews is a background review and places a specific project in the big picture. It introduces the rest of a research and establishes the significance and relevance of a research question. The review can summarize how the current research continues a developing line of thought, or it can point to a question or unresolved conflict.

75. Types of Literature Reviews 2. Historical review traces the development of an issue over time. It traces the development of an idea or shows how a particular issue or theory has evolved over time. 3. Theoretical reviews compare how different theories address an issue. It present different theories and compare them for the soundness of their assumptions, logical consistency, and scope of explanation.

76. Types of Literature Reviews 4. Methodological reviews point out how methodology varies by study. In it researcher evaluates the methodological strength of past studies. It describes conflicting results and shows how different research designs, samples, measures, etc., account for different results.

77. Structuring the review The precise structure of the critical review is usually your choice. Three common structures are: a single chapter; a series of chapters; throughout the project report as you tackle various issues.

78. Structuring the review Summarize every article briefly ; a sentence or two will do Interpret the article in light of its relevance to your own study Critique it, if necessary Show the stock of knowledge building up over the course of the literature and show how your research topic adds to this stock of knowledge

79. Structuring the review Several articles can be summarized in one mention Example : There have been numerous studies attempting to measure the return to education (see Becker (1963); Mincer (1968); Angrist and Krueger (1988); Bound et al. (1991)).” How long should the literature review be? a useful guide is that your review is likely to be in the region of 25–30% of your overall word count.

80. So far in this part we have discussed … The research process- research is broken down into a series of steps. Steps involved in the research process Identification of a Research Topic The research questions Attributes of a good research topic Capabilities Appropriateness- worthwhile Defining the research problem and setting objectives The literature review

81. Development of working hypothesis After an extensive survey of the literature, researchers should state in clear terms the working hypotheses. A hypothesis is a statement, which predicts the relationship between two or more variables. It provides an anticipation of what will be found out It is a link between theory and the investigation. It provides a logical framework that guides a researcher while designing a research study and collecting data. Formulating hypothesis is particularly useful for causal relationships.

82. Development of working hypothesis Hypothesis an unproven proposition (that is empirically testable), logical supposition, a reasonable guess, an educated conjecture that provides a tentative explanation for a certain fact or phenomenon under investigation; are a set of suggested tentative solution of a research problem, which can be or may not be a real solution. it may direct your thinking to possible sources of information that will aid in resolving one or more subproblems and, as a result, may also help you resolve the principal research problem.

83. Development of working hypothesis Hypothesis The word Hypothesis is composition of two words, “Hypo” and “Thesis”. Hypo means “under or below” and thesis means “a reasoned theory or a rational viewpoint”. means a theory which is not fully reasoned. is a proposition that can be tested for association or causality against empirical evidence (data based on observation or experience, e.g. survey data) Each hypothesis is formulated as a statement about a relationship between two variables and can be expressed in the null or the alternative form

84. Development of working hypothesis Testing Hypothesis (the null hypothesis) Is the process of comparing observed data with the results we would expect from chance alone: State the hypothesis (null and alternative) Determine the appropriate test statistics Specify the significance level (i.e. namely, “giving a signal” that certain dynamics are operating within the data and merit attention). Determine the decision rule Collect data & perform the needed conclusion Decide to reject or not reject and produce conclusion

85. Characteristics of useable hypotheses There are some important criteria for judging the goodness of a hypothesis.   The hypothesis must be conceptually clear . This involves two things the concept should be clearly defined the hypothesis should be commonly accepted ones. i.e. the hypothesis should be stated in simple terms. The hypothesis must be specific . assure that research is practicable and significance.

86. Characteristics of useable hypotheses The hypothesis should be related to available techniques . The hypothesis should be related to a body of theory . It should poses theoretical relevance. The hypothesis should be testable . hypothesis should be formulated in such a way that it is possible to verify it.

87. Characteristics of useable hypotheses Null and Alternative hypothesis Null hypothesis (Statistical hypothesis) –Ho a proposition that states a definitive, exact relationship between two variables States that the population correlation between two variables is equal to zero or that the difference in the means of two groups in the population is equal to zero (or some definite number) Expressed as no ( significant ) relationship between two variables or no ( significant ) difference between two groups Alternative hypotheses (Research hypothesis) –Ha/H1 the opposite of the null Statement expressing a relationship between two variables or indicating differences between groups

88. The null and the alternative hypothesis The null hypothesis (H ) states that the variables are independent of one another (ie there is no association) The alternative hypothesis (H 1 ) states that the variables are associated (ie there is an association) H is the default H 1 is accepted only if the test result provides significant evidence to reject H If you predict the IV has an effect on the DV in a particular direction, it is known as a one-tailed hypothesis A two-tailed hypothesis is where you cannot predict the direction 89

89. Example: Hypotheses to be tested H1 Voluntary audit is positively associated with turnover H2 Voluntary audit is positively associated with agreement that the audit provides a check on accounting records and systems H3 Voluntary audit is positively associated with agreement that it improves the quality of the financial information H4 Voluntary audit is positively associated with agreement that it improves the credibility of the financial information H5 Voluntary audit is positively associated with agreement that it has a positive effect on the credit rating score H6 Voluntary audit is negatively associated with the company being family-owned H7 Voluntary audit is positively associated with the company having shareholders without access to internal financial information H8 Voluntary audit is positively associated with demand from the bank/lenders H9 Voluntary audit is positively associated with the directors having qualifications or training in business or management 90

90. Possible Sources of Hypothesis Hypothesis may be developed/formulated from a variety of sources, including the following: Hypothesis originates in the science itself or in the scientist: Analogies (comparisons or analogies between social and natural systems). Hypothesis may rest also on the findings of other studies (e.g. exploratory) A hypothesis may stem from a body of theory value orientation of the culture in which a science develops may furnish many of its basic hypotheses To conclude the ideal source of fruitful and relevant hypothesis is a fusion of past experience and imagination of the researcher.

91. Hypotheses to be tested H1 Voluntary audit is positively associated with turnover H2 Voluntary audit is positively associated with agreement that the audit provides a check on accounting records and systems H3 Voluntary audit is positively associated with agreement that it improves the quality of the financial information H4 Voluntary audit is positively associated with agreement that it improves the credibility of the financial information H5 Voluntary audit is positively associated with agreement that it has a positive effect on the credit rating score H6 Voluntary audit is negatively associated with the company being family-owned H7 Voluntary audit is positively associated with the company having shareholders without access to internal financial information H8 Voluntary audit is positively associated with demand from the bank/lenders H9 Voluntary audit is positively associated with the directors having qualifications or training in business or management 92

92. End of Ch02 – Next Ch03 93 Compiled by Andualem (2015/2023)