The issue of endogeneity within theory-based, quantitative management accounting research

R.H. Chenhall*, F. Moers

*Corresponding author for this work

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Abstract a current issue of potential concern in theory-based management accounting research is the extent to which endogeneity limits the validity of empirical testing of models. This paper aims to stimulate debate as to the meaning of endogeneity as it applies to (management) accounting research. The paper explains what endogeneity is, its causes and consequences, and potential ways of managing the problem. Specifically, the paper argues that an econometric definition of endogeneity clarifies its meaning in empirical research. A series of basic issues that concern endogeneity and theory construction are presented. These include omitted variables, simultaneity, equilibrium conditions and issues concerning choice variables. Finally, possible approaches for dealing with endogeneity are presented.
Original languageEnglish
Pages (from-to)173-195
Number of pages23
JournalEuropean Accounting Review
Issue number1
Publication statusPublished - 1 Jan 2007

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