Showing papers by "Clive S. Lennox published in 2023"
TL;DR: In this article , the authors provide two criticisms of the way path analysis is used in practice: although many studies say they use path analysis to strengthen causal inferences, they are instead assuming away potential endogeneity problems by imposing the restriction of uncorrelated errors.
Abstract: Many scholars view path analysis as a tool to disentangle direct and indirect causal effects. Path analysis has become increasingly popular in the accounting literature with the number of papers using this methodology surging over the past decade. We provide two criticisms of the way path analysis is used in practice. First, although many studies say they use path analysis to strengthen causal inferences, they are instead assuming away potential endogeneity problems by imposing the restriction of uncorrelated errors. Second, many studies fail to explicitly state their assumptions, including the assumption of uncorrelated errors. This makes it difficult for the reader to determine whether potential endogeneity problems are being assumed away or, instead, necessary steps are being taken to address those problems. We conclude with several recommendations to improve the literature’s implementation of the path analysis method.