The explanatory power of explanatory variables

نویسندگان

چکیده

Abstract This paper examines the current empirical accounting research paradigm. We ask: In general, do estimated regressions support promoted narratives? focus on a regression model’s main variable of interest and consider extent to which it contributes explanation dependent variable. replicate 10 recently published studies, all rely significant t-statistics, per conventional levels, claim rejection null hypothesis. Our examination shows that in eight incremental explanatory power contributed by is effectively zero. For remaining two, contribution at best marginal. These findings highlight apparent overreliance t-statistics as primary evaluation metric. A closer data produced reject hypothesis primarily due large number observations (N). Empirical studies often require N > 10,000 To avoid drawback t-statistics’ connection with N, we implications using Standardized Regressions (SR). The magnitude SR coefficients indicates variables’ relevance directly. analyses establish strong correlation between variable’s coefficient its power, without reference or t-statistics.

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ژورنال

عنوان ژورنال: Review of Accounting Studies

سال: 2023

ISSN: ['1380-6653', '1573-7136']

DOI: https://doi.org/10.1007/s11142-023-09781-w