Research Methods in Accounting & Finance Chapter 1 Introduction

Research Method in Accounting
& Finance
Chapter: One
An Introduction
1
An Introduction
1. Meaning of Research
 Literally, research means to “search again”
 Is a quest driven by a specific question that needs an answer.
 Is a systematic attempt to obtain answers to questions about events
 Is a systematic inquiry aimed at providing information to solve problems.
 Is a scientific and systematic search for pertinent information on a
specific topic.
 research is an art of scientific investigation.
 meaning of research as “a careful investigation or inquiry specially
through search for new facts in any branch of knowledge.”
 Redman and Mory define research as a “systematized effort to gain new
knowledge.”
2
An Introduction
 Science is characterized by logic or rationality
and observation of empirical facts.
 Research is scientific because it is just a search
for knowledge through recognized methods of
data collection, analysis, and interpretation.
 The purpose of research is to discover answers
to questions through the application of
scientific procedures.
3
An Introduction
 Science is characterized by logic or rationality
and observation of empirical facts.
 Research is scientific because it is just a search
for knowledge through recognized methods of
data collection, analysis, and interpretation.
 The purpose of research is to discover answers
to questions through the application of
scientific procedures.
4
Contd...
• Clifford Woody research comprises defining and
redefining problems, formulating hypothesis or
suggested solutions; collecting, organizing and
evaluating data; making deductions and reaching
conclusions; and at last carefully testing the
conclusions to determine whether they fit the
formulating hypothesis.
• Research is, thus, an original contribution to the
existing stock of knowledge making for its
advancement.
5
An Introduction
2. Methods of acquiring Knowledge
 There are five methods of acquiring knowledge: -
i. Authority: When knowledge is obtained from individuals
who are qualified producers of knowledge.
E.g. knowledge about religion from priests and sheiks, students
get knowledge from students, etc…
ii. Tradition: When we accept without questioning the traditions,
customs or culture of our forefathers or the society.
E.g. it is not culturally accepted for males to wear females’
dresses.
iii. Experience: Our personal experience or our observation of
the experiences of other people .
E.g. we know rainy months in a year from our experience.
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iv. Reasoning: Knowledge can be obtained based on some rules
and forms of logic.
a. Deductive reasoning:- is a thinking process in which one will
go from general statements to specific statements.
b. Inductive reasoning:- is to go from specific to general ideas.
Deductive: Every mammal has lungs.
All rabbits are mammals.
Therefore, every rabbit has lungs.
Inductive: Every rabbit that has ever been observed has
lungs.
Therefore, every rabbit has lungs.
7
An Introduction
Inductive:
Mammals are mortal
Insects are mortal
Birds are mortal
Fishes are mortal
Plants are mortal
Replies are mortal
All living things are mortal
v. Scientific Method: integrates the most important aspects of
the inductive and deductive methods.
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 In scientific method, Knowledge is obtained through a
step by step process of collecting data, analyzing it
and reaching at a conclusion.
3. Characteristics of Scientific Method
Relies on empirical evidence
Utilizes relevant concepts
Committed to only objective considerations
Presupposes ethical neutrality
Results in to probabilistic predictions
Its methodology is made known to all concerned for
critical scrutiny
9
SIGNIFICANCE OF RESEARCH
• The increasingly complex nature of business and
government has focused attention on the use of
research in solving operational problems.
• Research, as an aid to economic policy, has gained
added importance, both for government and business.
• Research provides the basis for nearly all government
policies in our economic system.
• research certainly facilitates the decisions of the
policy maker.
• Research has its special significance in solving
various operational and planning problems of
business and industry.
10
Contd...
• Market research is the investigation of the structure and
development of a market for the purpose of formulating
efficient policies for purchasing, production and sales.
• Operations research refers to the application of
mathematical, logical and analytical techniques to the
solution of business problems of cost minimisation or of
profit maximisation or what can be termed as
optimisation problems.
• it is concerned with the determination of motivations
underlying the consumer (market) behaviour.
11
Contd...
• In addition ,the significance of research can also be
understood keeping in view the following points:
a) To those students who are to write a master’s or Ph.D. thesis,
research may mean a careerism or a way to attain a high
position in the social structure;
b) To professionals in research methodology, research may mean
a source of livelihood;
c) To philosophers and thinkers, research may mean the outlet
for new ideas and insights;
d) To literary men and women, research may mean the
development of new styles and creative work;
e) To analysts and intellectuals, research may mean the
generalisations of new theories.
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MOTIVATION IN RESEARCH
 The possible motives for doing research may be either one or
more of the following:
a) Desire to get a research degree along with its consequential
benefits;
b) Desire to face the challenge in solving the unsolved problems,
i.e., concern over practical problems initiates research;
c) Desire to get intellectual joy of doing some creative work;
d) Desire to be of service to society;
e) Desire to get respectability.
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Criteria of Good Research
a) The purpose of the research should be clearly defined
and common concepts be used.
b) The research procedure used should be described in
sufficient detail to permit another researcher to repeat
the research for further advancement, keeping the
continuity of what has already been attained.
c) The procedural design of the research should be carefully
planned to yield results that are as objective as possible.
d) The researcher should report with complete frankness,
flaws in procedural design and estimate their effects
upon the findings.
14
Contd...
d) The analysis of data should be sufficiently adequate to
reveal its significance and the methods of analysis used
should be appropriate. The validity and reliability of the
data should be checked carefully.
e) Conclusions should be confined to those justified by the
data of the research and limited to those for which the
data provide an adequate basis.
f) Greater confidence in research is warranted if the
researcher is experienced, has a good reputation in
research and is a person of integrity.
15
CONTD...
 The qualities of a good research as under:
• Good research is systematic: research is structured with
specified steps to be taken in a specified sequence in
accordance with the well defined set of rules.
• Good research is logical: research is guided by the rules of
logical reasoning and the logical process of induction and
deduction are of great value in carrying out research.
• Good research is empirical:research is related basically to one
or more aspects of a real situation and deals with concrete data
that provides a basis for external validity to research results.
• Good research is replicable:research results to be verified by
replicating the study and thereby building a sound basis for
decisions.
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Types of Research
4. Types of Research
 Generally, there are three Categories of research:
i. Pure Vs Applied Research
 Pure Research: adds new knowledge to the existing body of
knowledge.
- It does not necessarily provide results of immediate, practical use
 Applied Research: Carried out to solve an immediate and
practical problem. It is oriented to a specific problem.
- It has a practical problem solving emphasis.
- It is conducted to solve socio-economic or industrial problems
and thus have policy implication.
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Types of Research
- The purpose of applied research is to find out solution for an

immediate or practical problems.
ii. Quantitative Vs Qualitative Research
a. Quantitative Research: - Research based on the measurement
of quantity or amount.
-Is the systematic and scientific investigation of quantitative
properties and phenomena and their relationships.
b. Qualitative Research: Research concerned with qualitative
phenomenon.
- Qualitative research involves studies that do not attempt to
quantify their results through statistical analysis.
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Types of Research
 Ethnography, phenomenology, case study,
biographical, grounded theory and applied/action
research are among the wide range of qualitative
approaches used to study phenomena. The intent is
to uncover the implicit meaning in a particular
situation from one or more perspectives. The data
may include dynamic interaction such as one
observes or analyzes through discourse, semiotics,
narrative and content analysis.
Abebaw W., 2013 19

Types of Research
• Descriptive vs. Analytical:
 Descriptive research:
• includes surveys and fact-finding enquiries of different kinds.
• is description of the state of affairs as it exists at present.
• the researcher has no control over the variables; he can only
report what has happened or what is happening.
• often use the term Ex post facto research for descriptive
research studies.
• are survey methods of all kinds, including comparative and
correlational methods.
 analytical research:
• the researcher has to use facts or information already available,
and analyze these to make a critical evaluation of the material.
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Types of Research
iii. Conceptual Vs Empirical Research

a. Conceptual Research: - related to abstract ideas or theories.
- Philosophers and thinkers generally use it to develop new
concepts.
b. Empirical Research: - relies on experience or observation
alone.
- It is data based research coming up with conclusions
 Both applied and pure research are basically problem solving
based but in different senses.
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Research Process
5. Research Process
 The basic steps in the research process are:
1. Establish the need for research
2. Define the research problem
3.Review of literatures (both concepts and theories and previous
research findings)
4. Formulation of working hypothesis
5. Determine research design
6. Identify information types and sources
7. Determine methods of data collection
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Research Process
8. Design data collection forms (Questionnaire)

9. Determine sampling design and size
10. Collect data
11. Analyze data
12. Draw conclusions and report the final result
Establish the need for research
Research May not be needed if: -
-Information is already available
- There is insufficient time for Research
-Resources are not available
- Cost Outweigh the value of Research 23
Research Process
Define the Research Problem: reflects a gap in understanding

- Is a felt difficulty which requires solution
- Takes place when there is a problematic situation and a need
to solve the problem.
- Research problem can be identified from personal observation,
theory, professional literatures and discussion with experts.
Review of Literatures: is to undertake extensive literature survey
connected with the problem.
 Two types of literatures can be reviewed:-
i. Conceptual: - is concerned with related concepts and
theories.
ii. Empirical: - are studies made earlier which are similar to the
one proposed.
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Research Process
Formulation of Working Hypothesis: is tentative assumption

made in order to draw out and test its empirical consequences.
- Hypothesis formulation starts with a well stated research
problem.
- There are two types of hypothesis:
i. Null Hypothesis: - is a default position.
- It hypothesizes that there is no relationship between two
variables.
ii. Alternative Hypothesis: - is the opposite of null hypothesis
- Hypothesize s that there is r/ship between two variables .
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Research Process
Determine the Research Design: is the methods and approaches

which will best achieve the research objectives.
Identify information types and sources: two types of
information are available to a researcher i.e. primary and
secondary.
Determine Method of data Collection: includes telephone
surveys, mail surveys, personal interviews, observations, mail
intercept studies and etc.
Design Data collection forms: is a form that is used to ask and
record this information.
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Research Process
Determine sample design and size: is decision on the way of
selecting a sample for a study.
-Samples can be either probability samples or non-probability
samples.
Collecting the Data (Execution): Collecting the required data to
solve the research problem.
-Primary data can be collected either through experiment or through
survey. In the case of a survey, data can be collected through: -
i. Observation
ii. Personal interview
iii. Telephone interviews
iv. Questionnaires
v. Through schedules 27
Research Process
Analysis of Data (Including Test of Hypothesis): - involves:

- Entering data in to computer
- Inspecting it for errors
- Running tabulation and various statistical tests.
Drawing Conclusions and Report the final result: is making
generalizations
-The conclusions must be based on the data and the analysis
within the framework of the research study
- Communicating the result or solution of the problem to the
intended audience
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Research Process
6. Characteristics of a Good Research
1. Clearly defined research purpose and problem
2. The research procedures should be described in sufficient
detail for replication.
3. The procedural design of the research should be carefully
planned to yield objective results.
4. The researcher should report with complete frankness,
imperfections
5. Appropriate method of analysis should be used
6. Conclusions should be confined to those justified by the data
7. Good experience of the researcher
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The Value of Business Research for Managers
Reduction of uncertainty and improvement in the
quality of decision-making with several consequent
advantages (e.g. strategic, operational) and benefits
for organizations
Business Research Methods can be employed in

each of the following four stages:
(1) Identification of problems and/or opportunities

Useful for strategy planning, analysis of internal
and external organizational environment
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(2) Diagnosing and Assessment of problems and/or

opportunities
Its purpose is to gain insight into the underlying
reasons and causes for the situation. If there is a
problem, it asks what happened and why? If
there is an opportunity, it seeks to explore, clarify
and refine the nature of the opportunity and, in
the case of multiple opportunities, seeks to set
priorities
(3) Selection and Implementation of Courses of
Action. After alternative courses of action have
been determined, selection of the best possible
course.
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An important consideration is the quality of
forecasting which is an essential tool of research
(4) Evaluating the Course of Action
Business Research Methods are used after a

course of action has been implemented in order
to determine whether activities have been
properly implemented and have accomplished
what they intended to do
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Evaluation Research – It is the formal objective

measurement and evaluation of the extent which an
activity, project or programme has achieved its goal, and the
factors which influence performance (e.g. audits). It is also
the formal objective measurement and evaluation of the
extent to which on-going activities, projects or programmes
are meeting their goals (performance-monitoring research)
Examples of performance-monitoring research:
(1) Are railway passengers satisfied with the level of service

the railway company is providing? If not, then research
may need to be undertaken to ascertain the reasons for
customer dissatisfaction and propose corrective
measures
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(2) What are the trends in retail and wholesale sector? Can
research suggest new ways to improve efficiency in
purchase transactions?
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CHAPTER TWO
DEFINING THE RESEARCH PROBLEM
2.1. Problem definition
- is the beginning activity of the research process and is the most
difficult phase
- is the most critical step in scientific research
 A research problem: reflects a gap in understanding.
-is some difficulty which a researcher experiences in the context of
either a practical or theoretical situation
 A problem is said be occurred if: -
-The individual or the organization does not know what course of
action is best
- When the individual or organization is in doubt about the solution
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Defining the Research Problem
 Problem definition involves:

-Specifying the symptoms
- Itemizing the possible causes
 Formulating research problem entails asking a previously
unanswered questions for which an answer is sought.
2.2. Sources of Research Problem
-A research problem is a set of conditions that need solution
through data collection and analysis
- A good research problem should be one that is socially and
scientifically important.
36
Sources of Research Problem
 Research problem may arise from the following sources:

a. Personal Experience of Practical Situation: - day to day
experience and observation of the sounding real phenomena
- Unresolved issues in the surrounding environment
b. Previous Research and Related Literature: -articles and
journals, books, magazines and other research outputs and
literature bodies on the area of interest gives an insight
- Identify research gaps which appear to justify additional research.
c. Current Social and Political Issues: Contemporary debates,
concerns or movements.
- Changes in social, economic, political, cultural aspects …etc .
Their impacts or influence can be studied.
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Sources of Research Problem
d. From Discussions with Peoples: discussions with fellows,

students, neighbors, workers of different organizations, and with
different members of the society on various socio-economic,
political issues.
e. Personal Motivation: - an interest to know certain phenomena
or events from different perspectives
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The Components of the Research Problem
2.3. The Components of the Research Problem

1. There must be an individual or a group which has some
difficulty or problem.
2. There must be some objective(s) to be attained.
3. There must be alternative means (or courses of action)
4. There must remain some doubt in the mind of a researcher
with regard to the selection of alternatives.
5. There must be some environment(s) to which the difficulty
pertains.
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Selection of Research Problem
2.4. Selection of Research Problem

- The first step in the problem identification involves selecting a
research topic.
- Statement of the problem is generated from a research topic
- Problem must spring from the researcher’s mind
 The researcher should consider the following points in selecting
research problem
i. Subject which is overdone should not be normally chosen
ii. Controversial subject should not be chosen
iii. Too narrow or too vague problems should be avoided
iv. The subject selected for research should be familiar and feasible
40
Selection of Research Problem
v. The importance of the subject, the costs involved and the time
factor
 The research topic should be: -
i. The one in which the researcher has an interest
ii. The one that the researcher has the background knowledge
iii. The one that address felt need
iv. The one on which enough materials could be obtained
v. The one whose selection is justifiable on social, scientific or
policy grounds.
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Techniques of Defining a Research Problem
2.5. Techniques of Defining a Research Problem
- Defining the research problem properly and clearly is a crucial
part of a research study
 The technique for defining a research problem involves the
following general steps
i. Statement of the problem in a general way
ii. Understanding the nature of the problem
iii. Surveying the available literature
iv. Developing ideas through discussions
v. Rephrasing the research problem into a working proposition.
42
i. Statement of the problem in a general way: - the problem
should be stated in a broad general way and narrow it down and
phrase the problem in operational terms
Operational Definitions of Variables
• Operational definitions are not the dictionary definition of

variables. Rather, it refers to the manner in which variables
are measured in your study.
• Much more precise and unambiguous definitions of variables

can be stated in operational form, which stipulates the
operation by which they can be observed and measured.
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Operational Definitions : An Example
Research Topic:
• Factors affecting women ‘s representation in top-
management positions as a function of their
Educational Status in Ethiopia’
Variables (Operationally defined)
1. Women Representation: Proportion of women in government
organization above dept head
2. Top management: Leadership positions ranging from head of
dept to a minister.
3. Education Status: The academic qualification of women in
leadership positions.
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Variables (Operationally defined)……..
Please, note that a researcher can define the variables
1. Women Representation: Proportion of women in government

organizations above Commissioner
2. Top management: Leadership positions ranging from

commissioner to a Minster .
3. Education Status: The highest university degree earned by

women in leadership positions.
N:B: Note that the preceding definitions are different from the
above
45
ii. Understanding the Nature of the Problem: - understanding its

origin and nature clearly. The best way of understanding the
problem is to discuss it with those who first raised it.
iii. Surveying the Available Literatures: - All available literatures
concerning the problem at hand must be surveyed and examined.
 It helps a researcher to know if there are certain gaps in the
theories, or whether the existing theories applicable to the
problem under study.
Studies on related problems are useful for indicating the type of
difficulties that may be encountered in the present study

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iv. Developing the Ideas through discussions: - a researcher must
discuss his problem with his colleagues and others who have
enough experience in the same area.
v. Rephrasing the Research Problem: - is putting the research
problem in as specific terms as possible.
- In rephrasing research problem, a researcher has to develop: -
i. Statement of the problem: conveys the specific research
problem, usually in a few paragraphs. It should indicate:
- The focus area of the research
- Indicates researches done by other researchers in the area
including their findings
- Indicate issues that are not yet assessed by other researcher in
the area
47
- Show difference in the findings of various researchers in the
area
- Indicate the study area and the issues or subjects of research
- Indicate the purpose of the study
- A good research problem should be capable of being stated in
one major research question.
ii. Statement of Research Purpose: - conveys the focus of the
study and should be spelt out in clear, direct and unambiguous
manner
iii. Research Objective: specify the issues or area of knowledge
that the researcher wants to examine or explore.
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iv. Research Questions: -describe the ideas contained in a

research objective in the form of questions
v. Formulation of Research Hypothesis: - is a tentative
prediction of the expected relationships between two or more
variables.
- is a tentative statement or an educated guess suggesting possible
relationship, difference between two or more variables that can be
investigated and tested.
-Problem statement and hypothesis are similar in substance, except
that hypothesis is declarative statements.
- A hypothesis can be formed either in descriptive or relational
form.
49
 Characteristics of Good Hypothesis
- Capable of being expressed as a question
- It may be stated in a negative way e.g “Training do not increase
worker efficiency at work?”.
- Capable of being answered with a “yes” and “no” or “may be.”
- Should clearly show the relationship between the variables under
consideration
- Should be in line with the prevailing research findings and
theories.
- Should be testable
- Should be in agreement with research topic, problem statement,
research questions and research objectives
50
 Types of Research Hypothesis

1. Research Hypothesis (H1) – is a researcher’s
proposition about some social fact
2. Null Hypothesis (Ho) - is the reverse of research

hypothesis. It is a hypothesis of no relationship.
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Constructing a Hypothesis
A hypothesis is a tentative explanation for a
particular phenomena.
• Example,1:Most people believe that drinking too
much coffee will lead to heart disease.
This is a tentative explanation for the phenomena
of ‘heart disease – but we need to do research to
prove or disprove this hypothesis.
Example 2: After reviewing the data that shows
increased female participation in HE than two
decades ago, I may hypothesize as follows:
52
CONTD...
Hypothesis: There are twice as much female
electrical engineers to day than they were two
decades ago.
(Observe that, in this hypothesis, there is a
‘hunch’ i.e. the double rate of enrollment growth
i.e. 15% to about 30%) . However, the proportion
of female electrical engineers may be higher than
the previous or remained the same, or may be
even lower). But the researcher may prove or
disprove his/her hypothesis after analyzing the
data.
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FOUR STEPS TO HYPOTHESIS TESTING
 The goal of hypothesis testing is to determine the

likelihood that a population parameter, such as
the mean, is likely to be true. The four steps of
hypothesis testing:
• Step 1: State the hypotheses.
• Step 2: Set the criteria for a decision.
• Step 3: Compute the test statistic.
• Step 4: Make a decision.
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• Step 1: State the hypotheses.

We begin by stating the value of a population mean in a null
hypothesis, which we presume is true. For the children
watching TV example, we state the null hypothesis that children
in the United States watch an average of 3 hours of TV per
week.
This is a starting point so that we can decide whether this is likely
to be true,
NB:The null hypothesis (H0), stated as the null, is a statement

about a population parameter, such as the population mean,
that is assumed to be true.
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NB: The null hypothesis is a starting point. We will test whether

the value stated in the null hypothesis is likely to be true.
• Keep in mind that the only reason we are testing the null
hypothesis is because we think it is wrong.
• We state what we think is wrong about the null hypothesis in
an alternative hypothesis.
• For the children watching TV example, we may have reason
to believe that children watch more than (>) or less than (<)
3 hours of TV per week. When we are uncertain of the
direction, we can state that the value in the null hypothesis
is not equal to (≠) 3 hours.
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• An alternative hypothesis (H1) is a statement that

directly contradicts a null hypothesis by stating that
that the actual value of a population parameter is
less than, greater than, or not equal to the value
stated in the null hypothesis.
• The alternative hypothesis states what we think is

wrong about the null hypothesis.
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Step 2: Set the criteria for a decision.
• To set the criteria for a decision, by state the level of
significance for a test.
• Level of significance, or significance level, refers to a criterion
of judgment upon which a decision is made regarding the
value stated in a null hypothesis.
• NOTE: The level of significance in hypothesis testing is the
criterion we use to decide whether the value stated in the null
hypothesis is likely to be true.
• In behavioral science, the criterion or level of significance is
typically set at 5%.
• The alternative hypothesis establishes where to place the level
of significance.
58
• The empirical rule tells us that at least 95% of all

sample means fall within about 2 standard
deviations (SD) of the population mean, meaning
that there is less than a 5% probability of
obtaining a sample mean that is beyond 2 SD from
the population mean.
• For the children watching TV example, we can
look for the probability of obtaining a sample
mean beyond 2 SD in the upper tail (greater than
3), the lower tail (less than 3), or both tails (not
equal to 3).
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• Step 3: Compute the test statistic. Suppose we measure a

sample means equal to 4 hours per week that children watch TV.
To make a decision, we need to evaluate how likely this sample
outcome is, if the population mean stated by the null hypothesis
(3 hours per week) is true.
• We use a test statistic to determine this likelihood. Specifically,

a test statistic tells us how far, or how many standard deviations,
a sample mean is from the population mean.
• The larger the value of the test statistic, the further the
distance, or number of standard deviations, a sample mean is
from the population mean stated in the null hypothesis.
60
• The test statistic is a mathematical formula that allows
researchers to determine the likelihood of obtaining sample
outcomes if the null hypothesis were true. The value of the
test statistic is used to make a decision regarding the null
hypothesis.
• Step 4: Make a decision. We use the value of the test statistic
to make a decision about the null hypothesis. The decision is
based on the probability of obtaining a sample mean, given
that the value stated in the null hypothesis is true.
• If the probability of obtaining a sample mean is less than 5%
when the null hypothesis is true, then the decision is to
reject the null hypothesis.
FOUR STEPS TO HYPOTHESIS
TESTING
• If the probability of obtaining a sample mean is greater than
5% when the null hypothesis is true, then the decision is to
retain the null hypothesis.
• In sum, there are two decisions a researcher can make:
1-Reject the null hypothesis. The sample mean is associated
with a low probability of occurrence when the null hypothesis
is true.
2-Retain the null hypothesis. The sample mean is associated
with a high probability of occurrence when the null
hypothesis is true.
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• A p value is the probability of obtaining a sample
outcome, given that the value stated in the null
hypothesis is true.
• The p value for obtaining a sample outcome is
compared to the level of significance.
• NOTE: Researchers make decisions regarding
the null hypothesis. The decision can be to:
- retain the null (p > .05) or
- reject the null (p < .05).
63
quiz
1) What do you mean by research? Explain its
significance of research.
2) What are the key differences between basic
and applied research.
3) Identify source of research problem?
64
CHAPTER- THREE
DEVELOPING A RESEARCH PROPOSAL
 Research proposal is a written document of research plan
meant to convince specific readers
 is also known as a work plan, prospectus, outline, statement of
intent, or draft plan.
 It tells us: -
-What will be done?
- Why it will be done?
- How it will be done?
- Where it will be done?
- To whom it will be done?
- What is the benefit of doing it?
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Research proposal is essentially a road map, showing

clearly the location from which a journey begins, the destination
to be reached, and the method of getting there.
The Purpose of Proposal

-To present the problem to be researched and its importance.
-To discuss the research efforts of others who have worked on
related problems.
-To suggest the data necessary for solving the problem
 Proposals are also useful both for sponsors and for researchers.
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Types of a Research proposal
 Research proposals can be generally classified into internal and
external.
1. Internal proposals: - are done for corporations by staff
specialist or by the research department of the firm.
2. External proposals: - are done by external parties such as
consultant organizations or individuals.
 Can be either solicited or unsolicited.
o Solicited when the proposal is competing ,
o where as unsolicited proposal has no competition.
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Functions of a research proposal

A research proposal serves as: -
a. A means of communication: used to communicate the
researcher’s plan to those who give consultations.
b. A plan: - helps the researcher to organize his idea in a
systematic manner.
c. A contract : - constitutes a bond of agreement between the
parties (Between a sponsor and a researcher or a supervisor and
a researcher).
68
 STRUCTURE/OUTLINE/ OF A RESEARCH PROPOSAL
- There is no single way of writing research proposals.
- The following proposal components are usually important.
1. Cover page
2. Abstract
3. Background of the Study
4. Statement of the research problems
5. Research objectives
6. Significance of the study
7. Scope and Limitation of the study
8. Preliminary survey of literature
9. Research methods
10. Timetable/time schedule
11. Budget
12. Reference/ Bibliography 69
1. Cover page
The cover page contains: -
•Title: tells what the research proposal is all about. It should be
catchy, concise and descriptive.
- Capture and reflect the content of the proposal
- The name of the researcher /author of the proposal
- The name of the department/ institution
- Submission date
N.B. The title should use the fewest possible words that adequately
describe the content of the paper.
2. Abstract: - is a short summary of the research proposal.
- is a brief summary of approximately 250 words.
70
 Abstract should include the research problem, research
questions, the rationale for the study, the objective, the method and
expected value addition.
 It allows a busy managers or sponsors to understand quickly the
thrust of the proposal.
3. Background of the study: presents the background of what the
researcher wants to investigate and say briefly why he/she thinks
the works should be done and relate it to what is already known
about the problem.
- A description of the background of the study topic.
4. Statement of the problem: - reflects the gap and justifies that
the issue is worth researching.
71
-Should provide clear description of the problem to be

investigated by the research
A problem statement should reflect: -
-The problem area and major research gaps
- The social, scientific and development relevance of the problem
- A brief and preliminary overview of the literature
5. Research Objectives: - address the purpose of investigation
a.General objective: is the overall objective of the research project
b.Specific objectives: are elements of the general objectives which
are directly addressable by the methodology.
72
6. Significance of the study
- Is the importance or contribution that the study will
have for different bodies.
- States why the research has to be done.
7. Scope and Limitations of the study
- Scope: - refers to the coverage of the study in terms of
area as well as to the treatment of the variables.
- Limitation: - includes constraints or difficulties that
will have influence on the results of the study.
73
8. Preliminary literature Review
- is to locate literatures from a variety of sources, reading it
carefully and organizing it in to ideas (themes).
- Examining recent or historically significant research results,
company data, or industry reports.
- Aims to review the critical points of current knowledge about the
research topic.
 The major purpose and importance of literature review are: -
 To identify the potential difficulty in the investigation
 To avoid duplication (maintain originality)
 To improve the methodological and procedural matters
 To identify the gap in the specific study topic
74
9. Research Methodology
- Answers the “how” questions since it provides the work plan and
describes the activities necessary for the completion of the project.
- Gives details of how the research activity is going to be carried out.
- This section has to include: -
i. Study design
ii. Data type and source
iii. Population
iv. Sample size and sampling techniques
v. Data source and method of data collection
vi. Data collection instrument and procedure
vii. Data analysis techniques and computer program to be used.
75
10. Time Schedule/ Work Plan
-A research project has a beginning and an ending time.
-Is a realistic time schedule for completing the study.
- is dividing the study in to specific activities and assigning dates
/reasonable time for completing each activity.
11.Budget plan
- A plan for expending the resources required to carry out the research
in monetary terms such as personal costs, secretarial services,
fieldwork costs, overheads, Books/journal costs , equipments, etc.
12. Reference/ Bibliography
- Is a list of books, journals, and other documents that a researcher has
consulted and used while the study is conducted.
76
CHAPTER: FOUR
SAMPLING DESIGN
CENSUS AND SAMPLE SURVEY
Population: is the set of people or entities to which findings are to be
generalized.
 Sample: is a group of units selected from a population.
 Census: is collections of data from every person or entity in the
population or the study of all individual members of a population.
 Sampling Technique: is the process of selecting samples from a
population
Sample design: - is the technique or procedure the researcher adopts
for selecting items for the sample from the population.
The Need for Sampling
i. There could be resource (time, finance, manpower, etc.) limitations
ii. Tests may be destructive 77
SAMPLING DESIGN
iii. Sampling provides much quicker results than
does a census.
iv. If the population is infinite.
v. The quality of a study with sampling is often
better than with a census.
Two major principles underlie all sample
design:-
 The desire to avoid bias in the selection
procedure
 To achieve the maximum precision
78
SAMPLING DESIGN
Bias in selection can arise:
- If the selection of the sample is done by some non-random method
- If the sample frame doesn’t adequately cover the target population
- If some sections of the population are impossible to find or refuse to
co-operate.
STEPS IN SAMPLING DESIGN

 While developing a sample design, consider the following points.
1. Type of universe/population: - define the population explicitly before
a sample is taken and realize whether the universe is finite or infinite.
2. Sampling Units: is the unit of analysis or case in a population.
79
SAMPLING DESIGN
- Sampling unit may be a geographical area such as district, kebele,
village, or a social unit such as family, school, or it may be an
individual.
3. Source list/sampling frame: - is a list that contains the names of all
elements in the population.
4. Sample size: is the number of items to be selected from the
population to constitute a sample.
5. Parameters of interest: - In determining the sample design, one
must consider the question of the specific population parameters
which are of interest.
6. Budgetary constraint
7. Sampling procedure: - Deciding on the type of sample the
researcher will use.
80
SAMPLING DESIGN
Types and Causes of Incorrect Inferences in Sampling
 There are two causes of incorrect inferences: -
i. Systematic bias (Non- sampling error): results from errors in the
sampling procedures and it cannot be reduced by increasing the
sample size which may include field work problems, interviewer
bias, clerical problems, etc. This bias could arise due to: -
 Inappropriate sampling frame: - is a biased representation of the
population. Non-coverage error or wrong population sampled.
 Defective measuring device: - if the questionnaire or the
interviewer is biased or if the physical measuring device is
defective . Interviewer error or instrument error.
 Non-respondents: if we are unable to sample all the individuals
included in the sample. Low response rate
81
SAMPLING DESIGN
 Indeterminacy principle: individuals act differently when kept
under observation than what they are not.
Natural bias in the reporting of data:
ii. Sampling errors: - are errors attributable to sampling not to
census.
- are the random variations in the sample estimates around the true
population parameters. It decreases with the increase in the size of
the sample.
TYPES OF SAMPLE DESIGNS
 Sample designs are basically of two types based on those on the
principles of randomness and those that are not
i. Probability sampling
ii. Non-probability sampling. 82
SAMPLING DESIGN
i. Probability sampling designs: is a sampling technique in which
each member of a population has a known non-zero probability of
being chosen.
- Is also known as random sampling or chance sampling.
 The advantage of probability sampling over the non-probability
sampling are:
 Sampling bias will be minimized
 Relies on random process
 Helps to get consistent and unbiased estimates of the population
parameters
 One can calculate confidence interval within which the true
population parameter lies.
83
SAMPLING DESIGN
 The common types of probability sampling are:
1. Simple random sampling
2. Systematic random sampling
3. Stratified random sampling
4. Cluster random sampling
1. Simple random sampling: - each unit in the population has equal
chance to be included in the sample.
-Easy to accomplish and to explain to others.
- Fair way to select a sample
- Reasonable to generalize the results from the sample back to
population.
- Appropriate for homogenous population
84
SAMPLING DESIGN
• If researchers wished to draw a sample of 50
individuals from a population of 600 customers of
HARAR BRANCH OROMIA INSURANCE COMPANY,
they could place the 600 names in a container and,
blindfolded, draw one name at a time until the
sample of 50 was selected. This procedure is
cumbersome and is rarely used. Rather, a random
numbers table or computer-generated list is more
common.
• The simple way of doing this also is to use Microsoft
Excel to draw the sample.
85
SAMPLING DESIGN
- Is the best technique for selecting a representative sample.
- Uses lottery method and random number table method
to take a random sample.
2. Systematic random sampling: - is a technique of
selecting sampling units using a fixed interval on a randomly
ordered list of the sampling frame.
- It involves selection of every kth element in the sampling
frame.
Here are the steps to use systematic random sampling:
i.Number the units in the population from 1 to N
ii. Decide on the sample size “n”
iii. Determine interval size “k” using k = N/n
86
SAMPLING DESIGN
iv. Randomly select starting point 1 to k
v. Take every kth element until the sample size reach to n
For example, if a sample of 200 were to be selected from from a
directory of Savings Account holders with 200,000 listings, one
would select the first name by randomly selecting a name from a
randomly selected page. Then every thousandth name would be
selected until the sample of 200 names was complete. If the last
page were reached before the desired number had been
selected, the count would continue from the first page of the
directory.
-Systematic samples of automobile owners could be selected in
similar fashion from a state licensing bureau list or file or
-a sample of eighth-grade students from a school attendance roll.
87
SAMPLING DESIGN
3. Stratified random sampling: - involves dividing the
population in to homogenous subgroups/strata and
then taking a sample from each subgroup.
- Each of the homogenous subgroup is known as strata.
- Used when the population is heterogeneous
 The basic steps for stratified sampling are: -
i. Divide the population in to subgroups or strata
ii. Determine sample size of the whole population
iii. Compute sample proportion for each stratum based
on their population proportion.
88
SAMPLING DESIGN
iv. Make a separate and complete list of each stratum
v. Select sample from each stratum using simple random
sampling or systematic sampling technique to
constitute the sample
 The strata are formed on the basis of common
characteristic(s) of the items
 The number of items be selected from each stratum is
done using proportional allocation method.
At times it is advisable to subdivide the population into

smaller homogeneous random sample.
89
SAMPLING DESIGN
For example, in an income study of wage earners in a
community, a true sample would approximate the same
relative number from each socio economic level of the
whole community. If, in the community, the proportion
were 15% professional workers, 10% managers, 20%
skilled workers, and 55% unskilled workers, the sample
should include approximately the same proportions to
be considered representative. Within each subgroup a
random selection should be used. Thus, for a sample of
100, the researcher would randomly select 15
professional workers from the subpopulation of all
professional workers in the community, 10 managers
from that subpopulation, and so on.
90
SAMPLING DESIGN
• In addition to, or instead of, socioeconomic
status, such characteristics as age, gender, extent
of formal education, ethnic origin, religious or
political affiliation, or rural-urban residence might
provide a basis for choosing a stratified sample.
• The characteristics of the entire population
together with the purposes of the study must be
carefully considered before a stratified sample is
decided on.
91
Table: Stratified sample of 100 from a population of
1000 employees
Employee Type (Strata) Population (N) % (Total) Sample (n)
• Look at the diagram from other ppt

Professionals workers 150 15% 15
Managers 100 10% 10
Skilled Workers 200 20% 20
Unskilled Workers 550 55% 55
Total 1000 100%
92
SAMPLING DESIGN
4. Cluster (Area) Sampling:- is a probability
sampling technique whose sampling units are
homogeneous sub-groups (usually geographic areas)
called clusters.
-The elements within each cluster are heterogeneous.
-The area or cluster sample is a variation of the simple
random sample that is particularly appropriate when
the population of interest is infinite, when a list of the
members of the population does not exist, or when
the geographic distribution of the individuals is widely
scattered.
93
SAMPLING DESIGN
 Steps we follow in cluster sampling are: -
1. Divide the population in to clusters
2. Randomly sample clusters
3. Measure all units within sampled clusters
 Multi-Stage Random Sampling: is a two or more
stage cluster random sampling.
-It is a further development of the principle of cluster
sampling.
94
SAMPLING DESIGN
• For example, if researchers wanted to survey on real
estate investment in 20 sub-Saharan African (SSA)
Cities. Then from a total of 48 countries in SSA
(excluding Algeria, Tunisia, Libya, Egypt, Morocco,
and Tunisia), the researchers may be forced to
survey in 20 countries. Thus, the researcher may
employ cluster sampling so that the sample may
represent all SSA. Thus, from the five sub-regions
(clusters), the researchers randomly select three sub-
regions out of which 20 countries would be again
randomly selected.
95
96
SAMPLING DESIGN
ii. Non-probability sampling designs: - doesn’t involve random

selection of sampling units.
-Items for the sample are selected deliberately by the researcher
- Personal element has a great chance of entering into the selection
of the sample.
Non-probability sampling techniques are classified into: -
a. Judgment (purposive) sampling: - takes sample with a purpose
in mind.
- A researcher uses his judgment to select people that he feels are
representative of the population
97
SAMPLING DESIGN
• Purposeful sampling is often used in qualitative research studies.
In case studies and ethnographies, the participants are often
selected because they are typical or particularly interesting.
• Purposeful sampling allows the researcher to select those
participants who will provide the richest information, those who
are the most interesting, and those who manifest the
characteristics of most interest to the Researcher
b. Convenience (accidental) sampling: -is where the researcher
selects subjects on the basis of availability.
- The most convenience population is chosen, which may be the
researchers friends, work colleagues, etc.
98
SAMPLING DESIGN
• A convenience sample consists of those persons
available for the study. Researchers, because of
administrative limitations in randomly selecting and
assigning individuals to experimental and control
groups, often use co samples (e.g., available classes).
• In certain types of descriptive studies, the use of
convenience samples may restrict generalizations to
similar populations. For example, when a Marketing
researcher uses customers who visited a supermarket
on Friday afternoon cannot generalize to all customers
of that Store. Instead, he can make generalization for
only those who visited the store on that day.
99
SAMPLING DESIGN
c. Quota sampling: - is selecting a
predetermined number of individuals from
different group (i.e. based on age, gender, etc).
d. Referral Sampling: - utilizes some form of

referral, wherein respondents who are initially
contacted are asked to recommend others.
100
CHAPTER FIVE: SOURCES AND COLLECTION
OF DATA
 TYPES AND SOURCES OF DATA
Data sources can be generally classified into:
i. Primary sources: - are original or first hand data pertaining to
people, objects, or events.
ii. Secondary source: - are those which have already been collected by
someone else and passed through the statistical process.
 Cconsider the following points when choosing whether to collect
quantitative or qualitative data,
The purpose for which the data is required
 The subject matter
 The method of data collection: observation, interview, etc
 The method of data presentation
101
TYPES AND SOURCES OF DATA
The selection of data sources depends on:
 Purpose and scope of inquiry
Availability of time
 Availability of finance
Accuracy required
 Methods of data collection
102
SOURCES AND COLLECTION OF DATA
 Collection of Primary Data
-Primary data can be collected through experimentation or
through surveys.
Experiment: - is examining the relationship between two
factors by manipulating one whilst measuring changes in the
other.
 Survey: - refers to the method of securing information
concerning a phenomenon under study from all or a selected
number of respondents.
 Survey designs can be broadly divided into: -
i. Cross-sectional design
ii. Longitudinal design
103
Survey Design
i. Cross-sectional survey: - collects data at one time.
- Findings are generalized from such one-shot studies to the sampled
population
ii. A longitudinal survey: - takes place over time with two or more data
collections.
-The following are the types of longitudinal surveys:
a. A trend survey: is a longitudinal survey in which a general population is
studied over time.
-Different samples are selected from a general population and studied at
different time.
- The members of the population will change overtime of study.
- Can be carried out using secondary data
104
Survey Design
b. A cohort survey: - is a longitudinal survey in which a specific
population is studied over time.
- It focuses on the same specific population each time data are
collected.
- Data are collected from different samples that are drawn from
the same specific population.
- Can be carried out using secondary data
c. A panel survey: - is a longitudinal survey in which the same
sample is measured two or more times.
- The samples can represent either a specific or a general
population.
- Cannot be carried out through secondary analysis of previously
collected data.
105
Types of Longitudinal Studies
• Trend studies=examine changes within the general
population over time
– Example: HARAMAYA UNIVERSITY
• Cohort studies=examine more specific populations as
they change over time
– Cohorts=a group of people who enter or leave an
institution at the same time
– Example: Examining job placement success of
ACCOUNTING graduates by the year they graduated
• Panel studies=same set of people are interviewed
two or more times over time
– Example: NCVS-National Crime Victimization Survey
106
Comparison of Longitudinal
Studies
• Research topic: Arrests for burglary
• A trend study=Examine shifts in burglary arrests
during this time using the HU.
• A cohort study=Select a group of individuals because
of age/entering or leaving institution at the same
time & follow over time
• A panel study=Select a group of individuals and ask
them questions 2+ times over time
107
Survey Data collection Methods
 Survey Data collection Techniques
1. Observation Method
- is watching and recording behaviour and non- behaviour
characteristics of living beings, objects or phenomena.
- useful also when studying subjects who are not capable of giving
verbal reports of their feelings.
- Observation method of data collection can be designed as either
participant or non-participant.
 Participant Observation: - when the researcher actually
participates in the event or phenomenon being observed.
108
 Non-participant observation: - where the observer is outside the
social setting of the observed.
2. Interview Method - involves oral questioning of respondents
either individually or as a group.
a. Personal interviews: - requires a person (interviewer) asking
questions in a face-to-face contact to the interviewee.
b. Telephone interviews: This method of collecting information
consists of contacting respondents on telephone itself.
 Interviews can be: -
 Structured: - uses of a set of predetermined questions and highly
standardized techniques of recording.
- Interview questionnaires are used in structured interviews.
109
 Unstructured: - uses a list of topics rather than fixed questions.
-is more flexible and allows much greater freedom to ask in case of
need.
3. Questionnaire
- is a data collection tool in which written questions are presented
and given to respondents.
- It can be administered to respondents in different ways
 Sending questionnaires by mail
 Gathering all or part of the respondents in one place at one time
 Hand-delivering questionnaires to respondents and collecting them
later.
110
4. Focus Group Discussion /FGD/Method
- is typically composed of 7 to 12 participants who are unfamiliar each other
and conducted by a trained facilitator.
- Eight is a popular size
- The facilitator sets the agenda and lets the participants brainstorm on the
agenda.
 Case Study Method
- is an intensive study of a case which may be an individual, institutions, a
system, a community, an organization, an event, or culture.
- It is a method of in depth study rather than in breadth.
- is an intensive and comprehensive investigation of the particular unit
under consideration.
-
111
Collection of Secondary Data
- Secondary data are originally collected for a task other than the
task at hand.
- Most scientific papers are secondary data sources.
- Sources of secondary data can be:
 Central Statistical Authority Publications
 Publications by Regional Governments
 Publications by the different Ministries
 Publications of the National Bank of Ethiopia
 On-line and Electronic Data Bases
 Reports and publications of various associations
112
 Before using secondary data, one should consider: -
 Reliability of data: - by answering questions of who collected
them? What were the sources of data? What methods were used?
At what time were they collected? How they were analyzed?
 Suitability of data: Data must be evaluated whether they could
serve for another purpose other than the one for which they were
collected.
 Adequacy of data: This should be done in terms of area
coverage, level of accuracy, number of respondents
113
Chapter Six: Data Processing, Analysis and
Interpretation
Data Processing
 Processing implies editing, coding, classification and tabulation
of collected data
Editing: - is a process of examining the collected raw data to
detect errors and omissions
• Coding: - refers to the process of assigning numerals or other
symbols to answers or coding using numerical values to make it
ready for analysis.
 Classification: - is the process of arranging data in groups or
classes on the basis of common characteristics
 Tabulation: - is the process of summarizing raw data and
displaying the same in compact form for further analysis.
114
Measurement Scales
Measurement Scales
 Measurement is the precision by which a variable is measured.
- There are four basic measurement scales: -
1. Nominal: - describes variables that are categorical in nature or
deals with classifying a variable into different distinct groups.
2. Ordinal: - describes variables that can be ordered or ranked in
some order of importance e.g. (Likert scale for level of satisfaction
Or small, medium, large).
3. Interval : - are those in which the distance between each
descriptor is known or it describes variables that have more or
less equal intervals.
- Has no true zero or has an arbitrary origin.
115
Measurement Scales
4. Ratio: - describes variables that have equal intervals and a fixed
reference point.
- Represents the actual amounts of a variable.
- Are ones in which a true origin exists. That is, a zero income is
meaningful in real life.
Data Analysis: - is the process of cleaning, transforming, and
modeling data with a goal of extracting useful information in the
form of conclusion.
- Data analysis can be categorized as: -
1. Descriptive Analysis: - describes the basic features of a survey
data.
2. Inferential analysis: - give results beyond description of the
data.
116
Frequency Distribution
1. Descriptive analysis: - are used to describe the basic features of a
survey data.
-Describe and summarize data using descriptive statistics.
-It includes frequency distributions, mean, median, mode; range,
variance, and standard deviations.
a. Frequency Distribution- is shows the distribution (or the count)
of individual scores in a sample for a specific variables.
- Frequency refers to the number of times each score or response
occurs.
-Ungrouped Frequency distribution
- Grouped Frequency distribution
117
Ungrouped Data: - consists of single values along with their
frequencies.
Example: a survey of 16 micro and small businesses engaged in sale
of the products
Sales Amount Frequency Percentages Cumulative Percentages
30 3 18.75 18.75
35 4 25.00 43.75
40 5 31.25 75.00
45 2 12.50 87.50
50 2 12.50 100.00
N = 16 100%
118
Group Frequency Distribution- when values are grouped into
categories or intervals when the samples is very big.
- Class interval normally starts with the lowest score
R
- W=
K
W= width, K= No. of classes, R= range, Width should be the same.
Class-Interval Frequency Class Boundaries Mid Points
1–5 5 0.5 – 5.5 3
6 - 10 5 5.5 – 10.5 8
11 - 15 10 10.5 – 15.5 13
16 – 20 15 15.5 – 20.5 18
21 – 25 10 20.5 – 25.5 23
26 – 30 5 25.5 – 30.5 28
N = 50
119
Measures of Central Tendencies
b. Measures of Central Tendencies - are used to compute summary
statistics of variables being studied.
i. Mode: - is the most frequent value in the data
ii. Median: - is the middle value that divides ranked data into two
equal parts
iii. Mean: - is the average of a value of a data distribution
n
x i
x i 1
n
c. Measures of Dispersion/ Variation
i. Range: - Is the difference between the highest and the lowest value
ii. Standard Deviation: - shows the extent to which values in a
distributions deviate from their mean.
120
Correlation Analysis
Correlation analysis: - measures the degree of linear relationship
between two variables in a dataset.
- Shows the presence of association and degree of relation between
two and/or more variables in the data.
Correlation entails:
 Whether or not the correlation exists or not
 Degree of correlation
 Is it positive or negativities, i.e. direct or indirect
 Is the relationship strong or weak
 Correlation coefficient varies between +1 and -1.
- If the value is +1, there is a perfect positive relationship
- If the value is -1, a perfect negative relationship
121
- If the value is zero, the two variables are not related to each other
 The most common methods of correlation coefficient calculation
are Pearson’s and Spearman’s coefficient of correlation.
a. Pearson’s coefficient of correlation (Simple Correlation): - is
used for variables measured at interval or ratio scale and normally
distributed. It can be computed as: -
_ _
r
 (X i  X )(Yi  Y )
(n  1).S X .SY
Where, X = sample mean of X, Sx = Standard deviation of X
Y= sample mean of Y, Sy = Standard deviation of Y
r = Pearson’s correlation coefficient.
n = sample size
122
Student X Y X2 Y2 XY
1 5 10 25 100 50
2 3 7 9 49 21
3 1 4 1 16 4
4 6 5 36 25 30
5 7 3 49 9 21
6 2 8 4 64 16
N=6 X = 24 Y= 37 X2 = 124 Y2 = 263 XY= 142
123
N  XY    X   Y 
r=
N  X 2
 
   X   N Y  Y 
2 2 2

 6 142   24 37 
 36
 0.19
r=
 6 124   24   6  263   37 
2 2
168  209
- The value indicates low/weak negative correlation between variable

X and Y.
b. Spearman’s coefficient of correlation (Rank correlation): - is
used for data that have ordered categories.
- When the data are sufficient to rank the data as first, second, third,
and so forth
124
For calculating rank correlation coefficient:
1. Rank the observations by giving 1 for the highest value, 2 to the
next highest value, and so forth.
2. Record the difference between ranks (‘d’) for each pair of
observations
3. Square these differences to obtain a total of such differences
4. Then, spearman’s correlation coefficient is computed as: -
 6 d i2 
rr  1   
 n(n  1) 
2
Where, d2 is the sum of the squared difference of the ranks
125
Data Analysis
Example: - let us take one example of two sets of categories of 15
students with rank orders. One category is “ popularity ranking”
( i.e., the level of popularity of these 15 students among say 120
second year students of Accounting department, H U, and other
category of “exam-mark ranking” ( i.e., percentage of marks
secured in, say research methods course)
126
Students’ Exam Marks Popularity D ( difference D2
Name (1) Result (2) ranking (3) in ranking ( 2-3)
L 15 13 2 4
M 7 8 -1 1
N 2 1 1 1
O 5 7 -2 4
P 6 4 2 4
Q 13 15 -2 4
R 9 14 -5 25
S 11 9 2 4
T 8 5 3 9
U 10 10 0 0
V 4 6 -2 4
W 12 11 1 1
X 14 12 2 4
Y 1 2 -1 1
Z 3 3 0 0
D2 = 66
127
Computing rr, for data given above, we get:
 6 d i2 
rr  1   
 n(n  1) 
2
rr = 1- 6 x 66 = 1- 396 = 1 – 396 = 1- 0.117 =

0.88
15(152-1) 15 (225-1) 3360
- The obtained value of (rr) shows that:

 There is an association between popularity and exam results
(since coefficient is not zero)
 Association is very strong, and
 Association is positive.
128
Regression Analysis
Regression Analysis: - deals with prediction of values for a
dependent variable using known values of an independent variable.
-Is technique that establishes a functional relationship between the
dependent and one or more independent variables.
- Regression analysis explains the change in the dependent variable
as one of the independent variables change by one unit.
Simple regression analysis: - is predicting the value of one
dependent variable based on the value of one independent variable.
Multiple regression analysis: - is predicting the value of one
dependent variable using many independent variables.
129
Regression Analysis
To predict the value of dependent variable from the known value of
independent variable, one should follow two steps.
1.Determine linear regression line by using mathematical equation
2. Predict the value of dependent variable by using the mathematical
equation.
Y = a + bx
Y= Predicted value (Dependent variable)
b = slope of the line
a = Y-axis intercept ( when X value is zero).
X = Independent variable
- The slope of the line shows how the value of dependent variable
(Y) changes with the changing value of independent variable(X).
130
Regression Analysis
- The slope of the line (b) and the Y-intercept ( a) are determined as:
b = nXY -XY ; where n = represent number of observation
nX2- (X)2 b = Slope of the regression line
a = Y -bX ; where a = Y-intercept
n
a = Y- bx; Y and X = Mean value of Y, and X respectively
Example:- Suppose that a researcher conducted investigation on n
=20 business men with respect to two variables i.e. ability to
generate ideas (independent variable-X), and ability to create or
innovate (dependent variable-Y). Accordingly, he/she has collected
the following data from the 20 study units in relation with the
variables under consideration.
131
Regression Analysis
Individual
X Y X2 Y2 XY
Cases ( n)
1 15 12 225 144 180
2 10 13 100 169 130
3 7 9 49 81 63
4 18 18 324 324 324
5 5 7 25 49 35
6 10 9 100 81 90
7 7 14 49 196 98
8 17 16 289 256 272
9 15 10 225 100 150
10 9 12 81 144 108132
Regression Analysis
11 8 7 64 49 56
12 15 13 225 169 195
13 11 14 121 196 154
14 17 19 289 361 324
15 8 10 64 100 80
16 11 16 121 256 176
17 12 12 144 144 144
18 13 16 169 256 208
19 18 19 324 361 342
20 7 11 49 121 77
XY = 3205
X = 233 Y = 257 X = 3037
2
Y = 3557
2
X = 11.65; Y = 12.85; Sx = 4.120 ; Sy = 3.66, where Sx and Sy are standard deviation of X and Y
133
observations respectively
Regression Analysis
i. Determine the slope of the line (b)
ii. Determine the Y-intercept (a)
iii. Determine the regression equation
iv. Predict the value of Y when the value of X is 12.
v. b = nXY -XY = b = (20) (3205)-(233)(257) = 0.654
nX2- (X)2 ( 20)(3037)- (233)2
vi. a = Y -bX = 257 – (0.654)(233) = 5.2309
n 20
vii. The regression line equation will therefore be:
Y = 0.65 X + 5.2309
viii. The value of Y when the value X of is 12, will be
Y = 0.654 (12) + 5.2309 = 13.08
134
Inferential Analysis
2. Inferential analysis: - includes estimating of population values
and testing statistical hypothesis.
Test of Hypothesis
- Hypothesis is a tentative statement about the expected
relationship.
- Hypothesis testing is the procedure of determining the validity
or otherwise of inferences about population based on results
obtained from samples.
-There are various types of inferential statistical procedures that
are used in testing hypotheses.
Characteristics of Hypothesis
-It should be clear and precise.
-It should be capable of being tested.
135
Hypothesis Testing
 It should state relationship between variables.
 It should be limited in scope and must be specific,
 Hypothesis should be stated as far as possible in most simple
terms
 Hypothesis should be consistent with most known facts
 Hypothesis should be amenable to testing within a reasonable
time.
-The null hypothesis is termed as Ho, while the alternative
hypothesis is termed as H1.
- Alternative hypothesis is usually to prove and null hypothesis is
usually to disprove
136
Hypothesis Testing
Steps to be Followed in Hypothesis Testing
i. Formulate the Hypothesis ( Making a formal statement)
Null Hypothesis (Ho) M1 = M1
Alternative Hypothesis (H1) M1 # M1
Example, to investigate the relationship between educational
achievement and income level, a researcher may formulate the
following null and alternative hypothesis.
Null hypothesis (Ho): There is no significant relationship between
educational achievement and income level.
Alternative hypothesis (H1): Income level is significantly related to
one’s educational achievement.
137
Hypothesis Testing
ii. Spell Out the Assumptions and Characteristics of the Model
(data and sample). This include:
The type of variables and measurement scale;
Sampling method and sample size; and
Sampling distribution ( normal or non-normal distribution)
iii. Establishing the Significance Level or the Confidence Level
-is a measure of how strong the evidence must be before the Ho is
rejected.
- A researcher would be 95% confident that the difference found
between or among groups are due to treatment.
- The hypothesis is tested on a predetermined level of
significance.
138
Hypothesis Testing
Type-I Error and Type-II Error
- Type I error : - Rejecting Ho when it is True
-Type II error: - Accepting Ho when it is False
DECISION DECISION
ACCEPT H O REJECT HO
HO TRUE CORRECT DECISION TYPE I ERROR

( α error)
HO FALSE TYPE II ERROR CORRECT DECISION
( β error)
iv. Select a Random Sample and Computing an Appropriate Value

or Test of Statistic
139
Hypothesis Testing
v. Making the Decision (Decision Rule).
- In making decision, the computed statistic is compared with the
theoretical or critical value of the statistic for the significance
level set in advance.
As a rule, compare the calculated value with specified value of , the
significance level, then
 If Sc > Se , Ho is rejected ( H1 is inferred)
 If Sc < Se , Ho is accepted( Fail to reject Ho)
Where, Sc = Computed statistic
Se = Expected or critical statistic
- In terms of probability, Ho is rejected if the probability for the test
statistic is less than the critical significance level set, eg = 0.05 or
0.01.
140
Hypothesis Testing
Techniques to test a Hypothesis
i. Non-parametric Test: - utilizes variables measured in categorical
scale and do not make assumptions about the data.
a. Chi- Square (χ 2) Test: - used to establish relationship between two
variables, both of which are categorical in nature.
-Compares the theoretical population and actual data when categories
are used.
Characteristics of chi-square test
It is based on frequencies and not on the parameters like mean and
S.D.
It is used for testing the hypothesis and not for estimation.
 It has less mathematical details are involved.
 No rigid assumptions are necessary regarding the type of population
141
Chi- Square (χ 2) Test
Types of chi-square Test
a. Test for goodness of fit.
b. Test of independence.
c. Test of equality of several population proportions
Example: suppose we want to test the hypothesis that there is a
relationship between educational achievement and income level i.e.
test of independence. The variables “Educational achievement”, can
be categorized as “primary”, “secondary”, and “college”. The variable
“income level” can be categorized as “low income”, “middle income”,
and “high income”.
- If the observed frequency greatly departs from what is expected, then
we reject the null hypothesis that the two variables are independent of
each other.
142
i. Research Problem: What is the relationship between Educational
achievement and Income level?
ii. Null hypothesis ( Ho): - There is no relationship between educational
achievement and income level
iii. Alternative Hypothesis (Ha): - There is significant relationship between
educational achievement and income level
iv. Model Specification and Assumptions
Categorical variables; educational achievement and income level
χ 2 distributions
Random Samples
vi. Significance level: = 0.05
•Degree of freedom ( r-1) ( c-1) , where ‘r’- refers to no. of raw, and ‘c’-refers
to no. of columns in the observation.
•Critical Value of χ 2 = 9.488
143
vi) Computing χ 2 Statistic
Table: The Relationship Between Income Levels and Educational Achievement
Educational Achievements
Income
Total
Level Primary Secondary College
Low 135 125 40

300
Income (97) (110) (93)
Middle 80 110 80
270
Income (87) (99) (84)
High 75 95 160
330
Income (106) (121) (103)
NB. Total
The numbers in the290bracket are computed
330 or expected280values ( fe); 900
while
the numbers outside brackets are observed values ( fo).
144
Expected value( fe) = CT x RT where, CT- Column Total; RT – Raw Total, a
GT GT- Grand Total
Accordingly, fe = 290 x 300 = 97
900
Computed χ 2 Statistic =  (fo – fe)2/fe
χ 2 c = (135-97)2 /97 + (125-110)2/110 + (40-93)2/93 + …+(106-
103)2/103
= 14.88+ 2.04 + 30.20 + 0.56 + 1.22 +0.19 + 9.07 +5.59 +31.54 =
95.27
Decision χ 2 c = 95.27 > χ 2 expected, which is 9.488
- Hence, Ho is rejected, i.e. income level is significantly related to
one’s educational achievement.
145
Parametric Test
ii. Parametric Test: - utilizes variables measured in interval and
ration scale and make assumptions such as normal distributions and
linearity.
- Parametric techniques are more powerful than non-parametric
techniques when making inferences.
i.T-Test: - is used to test whether there are significant differences
between two means derived from two samples or groups at a
specified probability level.
a. T-test for Independent Samples: used when there are two
experimental conditions and different participants at each condition.
The members of one group are not related to members of the other
but they are selected from the same population.
- Hence, T-test is used to determine whether there is a significant
difference between the means of the two independent samples
146
T-Test
Example: - If the researcher wants to compare the IQ performance of
rural and urban children, he may select a sample of 30 subjects from
a rural school and another 30 subjects from an urban school and
administers the IQ test to both.
- A t-test is then used to compare the mean scores obtained by these
two groups.
General Rule: If calculated ‘t’ > critical ‘t’, reject Ho and then we
conclude that the two groups are significantly different.
Mean Std. Dev. Std error Case
Rural 90 5 0.93 30
Urban 120 8 1.49 30
SD
Se =
n 147
T-Test
i. Null hypothesis (Ho): There is no significant difference between the
IQ performance of rural and urban children
ii. Alternative Hypothesis (H1): IQ performance varies significantly
between rural and urban children.
iii. Model Specification and assumptions
Random sample n1 = 30 ; n2 = 30
Normal distribution of the dependent variable
T-distribution ( two tailed)
The dependent variable is measured at either interval or ration
scale.
iii. Significance Level = 0.05
Degree of freedom = ( n1 + n2)
Critical value of t = 1.67 (from t-table).
148
T-Test
iv. Computing the t-test
x - y 90  120 30
   19.29
tc = Se x rural + Se x Ur ban 0.93  1.49 2.42
Se = Standard error
V. Decision: t computed 19.29 > t expected 1.67, thus, Ho is rejected which
says ‘the means of the two groups are not statistically different.
Standard error means the standard deviation of sample means.
b.T-Test for Non- Independent Samples - the same group is pre-
tested on some dependent variable and then post-tested at a later date.
Used when there are two experimental condition and the same
participants took part in both conditions.
- T-test is used to determine whether there is a significant difference
between the means for one sample at two different times.
Analysis of Variance (ANOVA)
Analysis of Variance (ANOVA): - used when the means of more
than two groups are compared.
-It tells us whether three or more means are the same or not.
- An ANOVA produces an F-statistic or F-ratio.
- F-ratio tells us only that the experimental manipulation has had
some effect but it doesn’t show what the effect was.
- If only one factor is taken and investigate the differences among its
various categories, it is one-way ANOVA.
- If two factors are taken at the same time, then we have to use two-
way ANOVA.
- Then we have to make two estimate of population variance i.e. one
based on between samples variance and other based on within
sample variance.
150
Analysis of Variance (ANOVA)
F= Estimate of population variance based on between sample variance
Estimate of population variance based on within sample variance
F-ratio = MS between
MS within
- If the calculated F-value is less than the F- table value, there is no
difference between sample mean or Fail to reject Ho.
151
RESEARCH REPORT WRITING AND PRESENTATION
• Research report is considered a major component of the research
study for the research task remains incomplete till the report has
been presented and/or written.
• The following are the important purpose of the writing the reports;
 1) Presenting the results
 2) Easy to understand the findings to all
 3) To take the modification in the research work
 4) Future reference
 5) Guidance to other researchers
 6) Formal completion
 7) Written evidence
 8) Finding new idea
152
Different Steps in Writing Report
• (a) logical analysis of the subject-matter;

• (b) preparation of the final outline;
• (c) preparation of the rough draft;
• (d) rewriting and polishing;
• (e) preparation of the final bibliography; and
• (f) writing the final draft.
The final draft should be written in a concise and objective
style and in simple language, avoiding vague expressions such
as “it seems”, “there may be”, and the like ones.
153
preparation of the final bibliography;
• For books and pamphlets, the order may be as under:
• 1. Name of author, last name first.
• 2. Title, underlined to indicate italics.
• 3. Place, publisher, and date of publication.
• 4. Number of volumes.
Example
Kothari, C.R., Quantitative Techniques, New Delhi, Vikas
Publishing House Pvt. Ltd., 1978.
154
• For magazines and newspapers the order may be as under:
• 1. Name of the author, last name first.
• 2. Title of article, in quotation marks.
• 3. Name of periodical, underlined to indicate italics.
• 4. The volume or volume and number.
• 5. The date of the issue.
• 6. The pagination.
Example
• Robert V. Roosa, “Coping with short-term International
Money flows”, The Banker, London, September, 1971, p.995.
155
Layout of the Research Report
 A comprehensive layout of the research report should
comprise
(A)preliminary pages;
 report should carry a little and date, followed by
acknowledgements in the form of ‘preface’ or ‘Foreword’
 table of contents followed by list of tables and illustrations
(B) the main text; and
the complete outline of the research report along with all details.
The main text of the report should have the following sections: (i)
Introduction; (ii) Statement of findings and recommendations;
(iii) The results; (iv) The implications drawn from the results;
and (v) the summary.
156
• (C) the end matter.
 At the end of the report, appendices should be enlisted in
respect of all technical data such as
• questionnaires,
• sample information,
• mathematical derivations and the like ones,
• bibliography of sources consulted should also be given.
 Index (an alphabetical listing of names, places and topics
along with the numbers of the pages in a book or report on
which they are mentioned
157
Mechanics of Writing a Research Report
• The following points deserve mention sofar as the mechanics
of writing a report are concerned:
• (1) Size and physical design-
• (2) Procedure-
• (3) Layout-
• (4) Treatment of quotations
• (5) The footnotes
• (6) Documentation style
158
159

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Research Method in Accounting

- The purpose of applied research is to find out solution for an

Abebaw W., 2013 19

iii. Conceptual Vs Empirical Research

8. Design data collection forms (Questionnaire)

Define the Research Problem: reflects a gap in understanding

Formulation of Working Hypothesis: is tentative assumption

Determine the Research Design: is the methods and approaches

Analysis of Data (Including Test of Hypothesis): - involves:

Business Research Methods can be employed in

(1) Identification of problems and/or opportunities

(2) Diagnosing and Assessment of problems and/or

Business Research Methods are used after a

Evaluation Research – It is the formal objective

Examples of performance-monitoring research:

(1) Are railway passengers satisfied with the level of service

 Problem definition involves:

 Research problem may arise from the following sources:

d. From Discussions with Peoples: discussions with fellows,

2.3. The Components of the Research Problem

2.4. Selection of Research Problem

• Operational definitions are not the dictionary definition of

• Much more precise and unambiguous definitions of variables

1. Women Representation: Proportion of women in government

2. Top management: Leadership positions ranging from

3. Education Status: The highest university degree earned by

ii. Understanding the Nature of the Problem: - understanding its

iv. Research Questions: -describe the ideas contained in a

 Types of Research Hypothesis

2. Null Hypothesis (Ho) - is the reverse of research

 The goal of hypothesis testing is to determine the

• Step 1: State the hypotheses.

NB:The null hypothesis (H0), stated as the null, is a statement

NB: The null hypothesis is a starting point. We will test whether

• An alternative hypothesis (H1) is a statement that

• The alternative hypothesis states what we think is

• The empirical rule tells us that at least 95% of all

• Step 3: Compute the test statistic. Suppose we measure a

• We use a test statistic to determine this likelihood. Specifically,

Research proposal is essentially a road map, showing

The Purpose of Proposal

Functions of a research proposal

-Should provide clear description of the problem to be

STEPS IN SAMPLING DESIGN

At times it is advisable to subdivide the population into

• Look at the diagram from other ppt

Managers 100 10% 10

Skilled Workers 200 20% 20

Unskilled Workers 550 55% 55

Total 1000 100%

ii. Non-probability sampling designs: - doesn’t involve random

d. Referral Sampling: - utilizes some form of

Sales Amount Frequency Percentages Cumulative Percentages

N=6 X = 24 Y= 37 X2 = 124 Y2 = 263 XY= 142

- The value indicates low/weak negative correlation between variable

Where, d2 is the sum of the squared difference of the ranks

rr = 1- 6 x 66 = 1- 396 = 1 – 396 = 1- 0.117 =

- The obtained value of (rr) shows that:

HO TRUE CORRECT DECISION TYPE I ERROR

iv. Select a Random Sample and Computing an Appropriate Value

Low 135 125 40

• (a) logical analysis of the subject-matter;

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