Evidence-Based Policymaking: Promise, Challenges and Opportunities for Accounting and Financial Markets Research

Abstract

The use of evidence and economic analysis in policymaking is on the rise, and accounting standard setting and financial regulation are no exception. This article discusses the promise of evidence-based policymaking in accounting and financial markets as well as the challenges and opportunities for research supporting this endeavor. In principle, using sound theory and robust empirical evidence should lead to better policies and regulations. But despite its obvious appeal and substantial promise, evidence-based policymaking is easier demanded than done. It faces many challenges related to the difficulty of providing relevant causal evidence, lack of data, the reliability of published research, and the transmission of research findings. Overcoming these challenges requires substantial infrastructure investments for generating and disseminating relevant research. To illustrate this point, I draw parallels to the rise of evidence-based medicine. The article provides several concrete suggestions for the research process and the aggregation of research findings that could be considered if scientific evidence is to inform policymaking. I discuss how policymakers can foster and support policy-relevant research, chiefly by providing and generating data.

Reproducibility in Accounting Research: Views of the Research Community

“…The specificity of a topic limits the number of relevant papers and, hence, the extent to which irreproducible results are likely to be uncovered. More generally, a relatively small number of studies and the resulting concern about the reliability of the results are a significant impediment for policy makers when pursuing evidence-based or evidence-informed regulation (see also Leuz [2018]).…”

Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs

“…Second, our framework and findings can contribute to evidence-based policy making (Leuz [2018]). Understanding the behavior of individual investors is critical to designing and evaluating investor protections (SEC [2017c]).…”

“…White has said: "The retail investor must be a constant focus of the SECif we fail to serve and safeguard the retail investor, we have not fulfilled our mission." 9 While our study does not comprehensively analyze the SEC's efforts to help individual investors, we aim to provide evidence for policymaking discussions (Leuz [2018]). To that end, this section provides examples of regulations designed in part to aid individual investors by reducing information awareness and acquisition costs, as described using language drawn from the cost-benefit analyses within those regulations.…”

El uso de la evidencia en las políticas públicas: el caso de las Evaluaciones de Desempeño y Ejecución Presupuestal en el sector Educación en el Perú

“…Justamente uno de los propósitos principales de diseñar políticas basadas en evidencia es hacerlas resistentes y blindarlas a presiones políticas y a grupos de intereses externos que no estén alineados con los objetivos de política nacionales. Desde esta perspectiva se entiende a la ciencia como un contrapeso para reducir el efecto de intereses políticos (Leuz, 2018;Zingales 2015). Es por esto que las EBP cumplen un rol fundamental en el fortalecimiento de la democracia y sus pilares (como por ejemplo la rendición de cuentas), y por ende forman parte de un componente importante en la agenda de organismos multilaterales y cooperantes que buscan promover la democracia en el mundo, así como financiar, respaldar y publicar investigaciones en torno a la efectividad de políticas que usen evidencia (Milani, 2005;Prewiott, 2012).…”