Accounting Research as Bayesian Inference to the Best Explanation
By Sanjay Kallapur
Accounting, Economics, and Law: A Convivium | October 2023
DOI
www.degruyter.com/document/doi/10.1515/ael-2021-0083/html
Citation
Kallapur, Sanjay. (2022). Accounting Research as Bayesian Inference to the Best Explanation Accounting, Economics, and Law: A Convivium www.degruyter.com/document/doi/10.1515/ael-2021-0083/html.
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Accounting, Economics, and Law: A Convivium, 2022
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Abstract
The problems with p-values have been extensively discussed recently, but one of its biggest limitations has not received enough attention: p-values account for sampling error and therefore help generalize from a sample to a population, but science seeks to generalize from observations to theories. This article explains how science can best be characterized as Bayesian inference to the best explanation, which involves developing and assessing theories based on their fit with background facts and their ability to explain the observed data better than competing theories can. These factors translate into prior odds and Bayes factor respectively, which determine posterior odds under Bayesian inference. I provide examples from accounting research to illustrate these points.

Sanjay Kallapur is a Professor of Accounting at the Indian School of Business (ISB). He joined ISB in 2005 from the Krannert School of Management, Purdue University, where he was a tenured Associate Professor.

Professor Kallapur conducts research on financial and managerial accounting, auditing, corporate governance, and risk management. He has published in each of the top three accounting journals, and his papers have been cited over 4,000 times (Google Scholar) and in regulatory policy documents in India and the UK. The American Accounting Association recently published his monograph on scientific inference in accounting research, beyond the use of p-values.

He is the founding Editor-in-Chief of Accounting Theory and Practice, a research journal focusing on India, published by Elsevier. He has been an editor of The Accounting Review from 2008 to 2011, the first person from outside North America to be appointed to that position.

Professor Kallapur is a member of National Financial Reporting Authority (NFRA), the regulatory body overseeing the accounting and auditing of listed companies in India. He is an independent director on the Board of IDBI Bank, where he serves on the risk management and audit committees. He previously served on the Board of the Life Insurance Corporation of India.

Professor Kallapur has held positions as Associate Dean and Deputy Dean for almost a decade at ISB. He started the PhD-equivalent Fellow Programme in Management at ISB and has placed his students in faculty positions at the London School of Economics, IESEG Paris, Aalto University, University of Queensland, University of Western Australia, and IIM Udaipur.

Professor Kallapur has a PhD in Business Economics from Harvard Business School, and B.Com. and M.M.S. degrees from Mumbai University. He is professionally qualified as a Fellow Member of the Institute of Cost Accountants of India (FCMA).

Sanjay Kallapur
Sanjay Kallapur