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The purpose of these remarks is to comment on directions in accounting research: NEAR (Not-so Early Accounting Research) and FAR (Future Accounting Research), focusing on capital market research. The topic provides an opportunity to synthesize recent research trends and to speculate on which are likely to continue and why. As is often the case, the reasons given for expecting certain trends to continue can be more informative than whether they turnout to be accurate.
My comments focus on three areas. First, I review the forces that have influenced accounting research over the last 25 years. Second, a portion of NEAR directions is reviewed using two personal focal points-the set of research papers discussed in the accounting security price research seminar at Stanford and the set of research papers that constitute my current research interests. Third, I discuss the major characteristics of FAR directions, including ingredients which tend to lead to good accounting research, the benefits of generic versus contextual research, and finally the role of "wild card" factors.
FACTORS AFFECTING DIRECTIONS IN ACCOUNTING RESEARCH
For ease of discussion, the forces historically affecting accounting research are divided into exogenous and endogenous factors. I consider three exogenous factors that arise "outside" of the influence of the accounting academic community.
Exogenous Factors
The first factor is applications from other disciplines. Finance, information economics and behavioral sciences have significantly influenced accounting research. This force is likely to continue to affect future accounting research. However, it is not obvious where and when the next "shock" will arrive. While there have not been recent major shifts in accounting research of the order of magnitude that occurred 25 years ago, accounting research has not idly waited for some related discipline to supply the next infusion of insight. Theory and evidence, developed within the context of accounting institutions, has led to significant progress.
The second factor is greater data availability at lower cost, which largely arises because of changes in computer technology. The availability of security price and return data (e.g., CRSP) and financial statement data (e.g., COMPUSTAT) has had a dramatic affect on volume and quality of empirical research in the capital markets area. The availability of analysts' forecasts and recommendations (e.g., IB/EIS) has stimulated research on analyst behavior. Prospectively, international data...