Evidence-based policymaking: promise, challenges and opportunities for accounting and financial markets research
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 endeavour. 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 if scientific evidence is to inform policymaking. I discuss how policymakers can foster and support
policy-relevant research, chiefly by providing and generating data. The article also points to potential pitfalls when research becomes increasingly policy-oriented.
Keywords: A11; D61; D72; G18; G38; K22; L51; M48; accounting; capital markets; causal inferences; cost–benefit analysis; evidence-based policymaking; finance; political economy; regulation; standard setting
Document Type: Research Article
Affiliations: Booth School of Business, University of Chicago, Chicago, IL, USA
Publication date: 29 July 2018
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