Complementing a positivist approach to investment analysis with critical realism: Challenges and a way forward

Abstract

Purpose

The purpose of this paper is to identify the challenges in adding a critical realist epistemological perspective to a positivist approach in research on listed companies by equity researchers and other financial services professionals.

Design/methodology/approach

A purposive sample of publicly available equity research reports was examined to assess the dominant epistemological approach to investment analysis.

Findings

It was found that there is an absence of a critical realist epistemological approach to investment analysis, confirming the dominance of a positivist approach to obtaining and analysing investment information.

Research limitations/implications

This research drew on a small, purposive sample, and could be followed by more wide‐scale research. Taking a critical realist approach may create a clash of “institutional logics” which will need to be considered by a range of stakeholders.

Originality/value

Equity research reports are examined through the lens of critical realism. This exploration allows for an additional epistemological perspective on analysis of firm value.

Citation

O'Donnell, L., Kramar, R. and Dyball, M. (2013), "Complementing a positivist approach to investment analysis with critical realism: Challenges and a way forward", Qualitative Research in Financial Markets, Vol. 5 No. 1, pp. 6-25. https://doi.org/10.1108/17554171311308931