Another auditing research area examines auditing as an industry. Modeling Research One of the most difficult areas of research to read is analytical modeling research. These studies are exercises in symbolic logic that apply information economics to accounting settings. They are most often published in the Journal of Accounting Research and have been applied in financial reporting, managerial accounting, and auditing. While modeling research allows the researcher to focus on very specific issues, it is also usually very abstract, with conditions and assumptions that make generalization to business settings exceptionally difficult.
Models often consider only a single time period.
Accounting information problems are often finessed with assumptions that are hard to regard as realistic, for example by assuming the existence of a perfect monitor that would always report managers' lying. These studies develop economic models of behavior and then test them in laboratory experiments, which often involve auctions or markets for stock or other goods. This research had its genesis in the field of experimental economics, which was pioneered by Vernon Smith of the University of Arizona. In recent years, accounting studies have used experimental economics and laboratory markets to explore financial reporting, auditing, managerial accounting, and tax. Until the past few years, few of these studies were published in academic accounting journals.