--- name: revacc-methods description: Use when research design and identification are the bottleneck for a Review of Accounting Studies (RAST) manuscript — choosing the setting, shock, and design that credibly identify an accounting effect, or fixing the primitives and solution concept of an analytical model. Designs the study; it does not run the estimation and robustness (revacc-data-analysis) or frame the contribution (revacc-contribution-framing). --- # Research Design & Identification (revacc-methods) ## When to trigger - Your treatment (a disclosure, a standard adoption, an audit/tax regime) may be endogenous - Adoption is staggered across firms/years and you need a defensible DiD - You have an association and a referee will ask "is this causal or just correlation?" - You are designing an experiment to isolate a channel archival data cannot separate - You are building an analytical model and must fix primitives, timing, and the equilibrium concept ## Identification for archival accounting at RAST Accounting treatments — disclosure choices, conservatism, auditor selection, tax positions, standard adoption — are rarely random, so RAST referees expect a **credible identification strategy**, not kitchen-sink controls. Pick the design that breaks the endogeneity for *your* accounting setting. | Identification threat / setting | Design | |---------------------------------|--------| | Regulation / standard adoption with a clean date (e.g., a reporting mandate) | Difference-in-differences; event study around the adoption date | | Staggered adoption across firms/states/countries | Staggered DiD with modern estimators (avoid naive TWFE bias) | | Endogenous accounting/auditor/tax choice | Instrumental variables / 2SLS with a defensible exclusion | | A threshold rule (covenant, index inclusion, size or regulatory cutoff) | Regression discontinuity | | Selection on observables | Matching (PSM/entropy) as a complement, not the main claim | | A plausibly exogenous shock to the information environment | Natural experiment; pre-trends shown | | Information content of an accounting signal | Short-window event study with a clean benchmark and confound check | State the **estimating equation**, the **unit and level**, the **fixed effects** (firm, year, industry-year), and the **identifying variation** explicitly. The design section must make a skeptic believe the variation is as-good-as-random conditional on controls. RAST's first-round-decision culture means a weak design is more likely to draw a reject than a "fix it in revision." ## Measurement design is part of identification For contested accounting constructs (discretionary accruals, earnings quality, disclosure indices, audit quality, information asymmetry), the **proxy choice is a design decision**. Pre-commit a primary measure with precedent and plan the alternative proxies you will use to show the result is not proxy-driven (carried out in `revacc-data-analysis`). A clean design on a fragile proxy still fails. ## If the lane is analytical - Fix the **information structure, players, timing, and payoffs** before solving; state the equilibrium concept (PBE, sequential, etc.). - Show the model is the **minimal** structure that generates the accounting result; defend each assumption as load-bearing. - Plan the comparative statics that become testable or normative accounting implications. ## If the lane is experimental - Manipulate the focal accounting construct with realistic stimuli and a fit-for-purpose pool (investors, auditors, managers); IRB documentation is expected. - Pre-register where feasible; include manipulation and attention checks; power the design for the **interaction**, not just the main effect. ## Design hygiene - Show **parallel pre-trends** for any DiD and report dynamic (event-time) effects. - Defend the **exclusion restriction** for any IV in words — relevance alone is not enough. - Pre-commit the main specification; relegate alternatives to robustness. - Plan the data provenance trail now (Compustat/CRSP/I/B/E/S/audit-data vintages and screens). ## Execution bridge (StatsPAI / Stata MCP) For the **empirical / causal lane**, estimate and audit rather than only specify. Full map: [`execution-with-mcp`](../../../shared-resources/empirical-methods/execution-with-mcp.md). RAST is empirical accounting; emphasize identification of disclosure / governance effects and the multiple-testing haircut for mined associations. - `detect_design` → `recommend` → fit with `as_handle=true` → `audit_result` to enumerate the checks the design owes. - **Panel / staggered DiD:** `callaway_santanna` / `sun_abraham` + `bacon_decomposition` + `honest_did_from_result`. **IV:** `effective_f_test` + `anderson_rubin_ci`. **RDD:** `rdrobust` + `mccrary_test`. - **Experiments:** randomization-based inference and `romano_wolf` for the many-outcome family-wise correction reviewers expect. Match the toolchain to the **reviewer pool**, and report the effect size the venue wants. A run end-to-end (synthetic data, real returns) is in the [JF execution walkthrough](../../../Journal-of-Finance-Skills/resources/worked-examples/02-execution-walkthrough.md). ## Checklist - [ ] The identifying variation (shock/setting/threshold) is named and defended - [ ] Estimating equation, unit, level, fixed effects, and clustering plan are stated - [ ] DiD shows pre-trends and dynamic effects; staggered designs use a modern estimator - [ ] IV exclusion restriction is argued, not asserted; matching is a complement, not the claim - [ ] Primary construct proxy pre-committed; alternative proxies planned - [ ] Analytical models fix primitives/timing and the solution concept before solving - [ ] Experiments have IRB, realistic stimuli, manipulation/attention checks, adequate power ## Anti-patterns - **Kitchen-sink controls** standing in for identification ("we control for everything"). - **TWFE on staggered adoption** without addressing heterogeneous-treatment-effect bias. - **IV by convenience:** an instrument correlated with the outcome directly. - **Matching as causal proof** when selection is on unobservables. - **Proxy fragility:** a single contested construct measure with no alternative planned. - **Non-minimal model:** primitives a referee can strip without losing the result. ## Output format ```text 【Lane】archival / analytical / experimental 【Setting & identifying variation】... 【Design】DiD / staggered-DiD / IV / RDD / event study / experiment / model 【Spec】equation; unit/level; fixed effects; clustering plan 【Construct】primary proxy + alternatives planned 【Identification defense】pre-trends / exclusion / discontinuity / randomization ... 【Data provenance】sources + vintages + screens noted 【Next skill】revacc-data-analysis ```