Fabricated Data Swept Under the Rug at Chicago Booth
Fabricated Data Swept Under the Rug at Chicago Booth
accountants really are the worst
Update: After posting this article, I received this email from a finance professor alleging additional scientific misconduct at JAR.
Last week I broke the news of 3 academic scandals: Plagiarism at Yale School of Management, Leaked Report Shows Harvard Professor Fabricated Data and Lisa Cook's Tenure Packet. Great Success!
Now I have yet another smoking gun showing yet more fraudulent data & research misconduct, this time by a pair of accounting professors, Dr. Petro Lisowsky and Dr. Michael Minnis. In 2020 they published a paper called The Silent Majority: Private U.S. Firms and Financial Reporting Choices in the Journal of Accounting Research — arguably the top academic accounting journal in the world. This paper claims to obtain "consolidated parent level tax returns" from the IRS.
The problem? This data doesn't exist.
I am going to avoid delving into the minutiae of IRS tax data in this article because the sheer mind-numbing jargon would make you want to blow your brains out. Basically: the authors claim to have consolidated data, but partnerships and S-corps cannot file consolidated. They just can't. It's not allowed. If they tried, they would not be able to. The authors do not have the data they claim to. That is research misconduct, and as close to a smoking gun as you are going to find.
Maybe they thought they could get away with it because of how ungodly boring the paper was — nobody actually reads this stuff, right? After reading just the abstract I wanted to put my head in a vice and squeeze:
What can you expect from people who voluntarily chose to get a PhD in Accounting?
I mean… how much do we really need to know about debits and credits?
Minnis is a professor at UChicago, and Lisowsky is a professor at Boston University. So why does the title of this article say “Chicago” only? Well, this journal is literally owned by UChicago, they are the main players here. When the alleged fraud was brought to the journal’s attention, rather than send it to external reviewers to review the claims and submit a recommendation to the journal, they chose Chicago faculty to investigate the fraud allegations against the Chicago faculty. This suggests the Chicago editors are either incompetent or corrupt.
*** Disclaimer: A couple of years ago I worked for the UChicago economics department.
Is Chicago going to investigate itself and find itself guilty? The idea is laughable. Especially since they know nobody cares about boring accounting research so this will never blow up in the mainstream media. I guess that speaks to the need for independent/alternative media such as Substack. Please consider subscribing to my Substack for free so that I can keep holding these peoples’ feet to the fire as best I can:
The Whistleblower
This issue was brought to JAR’s attention by an anonymous whistleblower dubbed “W. Ben Hur.” He — or she, I guess, but it is almost 100% a dude — contacted the journal, the journal conducted an investigation, and then the whistleblower posted the outcome of this investigation on Twitter this week:
Final Report on our Investigation into Alleged Research Misconduct by the
Authors of “The Silent Majority” (JAR 58/3, 2020)
Dear WBH
On December 30, 2020, the editors of the Journal of Accounting Research (JAR) were made aware of an alleged misconduct by Lisowsky and Minnis (hereafter LM) in their published paper “The Silent Majority: Private U.S. Firms and Financial Reporting,” Journal of Accounting Research Vol. 58, No. 3: 547–588, 2020, by email from an anonymous whistleblower W.B. Hur (hereafter Hur).
The email contained an attachment detailing the allegations. The issue was discussed at the next editors’ meeting in January. As the concerns involve a paper for which one co-author is at Chicago, Mark Lang as the accepting (guest) editor of the paper and me (Luzi Hail) as a current senior editor at JAR who is not faculty at Chicago were asked to lead the investigation. This is to ensure the independence of the process.In this letter, we want to inform you about the outcome of this investigation.
Over the months that followed, we conducted a full investigation into this matter. Specifically, we investigated the two main issues in Hur’s allegation:
(1) non-existent/made-up data, and
(2) intentional misrepresentation of data used in analysis.
The investigation was extensive, conducted in accordance with the COPE guidelines (see also https://authorservices.wiley.com/ethics-guidelines/index.html), went over several rounds of fact finding and involved all the outside senior editors for JAR, as well as separate assessments made by two external experts. Following the investigation, we concluded that regarding issue (1) we see no merit in the allegation that LM used non-existent data or fabricated their data. We also do not agree with the tone and way in which Hur has put forward this allegation in his/her written statement.Regarding issue (2), that is, the intentional misrepresentation of the data used in the analysis, we found no such evidence of this by LM. Taken together, we concluded that the issues raised by Hur against the authors of the study “The Silent Majority: Private U.S. Firms and Financial Reporting” are not substantiated and we have found no evidence that the authors intentionally misrepresented their data. Accordingly, JAR now considers the matter closed. At the same time, we learned over the course of the investigation that – on a factual level – the description of the data and sample in LM’s article could be perceived as unclear and potentially misleading. In particular, it is unclear whether each observation or private entity in the original LM sample of corporate and partnership tax returns is making independent decisions, which we consider relevant for the paper’s research question.
In light of the importance of the independence issue, which permeates business’ tax return data, the editors concluded that it would be prudent to share the insights gained during this process with the readers of JAR. As such, we have encouraged LM to compile a short research note explaining the independence concern in the tax return data, which would be published in JAR. We feel that such a research note would benefit the profession and future research in the area.Because it was your anonymous email that brought this issue to our and the authors’ attention, we ask you whether you want to be acknowledged in this research note if the authors choose to pursue this option. We have also informed LM of the outcome of the investigation.
Yours sincerely
Luzi Hail and Mark Lang
Some comments:
There are 2 issues here:
1) Is the paper fundamentally misleading in a way that is incorrect?
Unequivocally yes, and JAR admits it. The key sentence here is: "that said, we learned ... on a factual level... the description of the data and the sample in LM's article could be... misleading … to the paper’s research question.” Misleading in a way fundamental to the research question! The fact they acknowledge there even might be fraud tells how massive the issues are. You can rest assured they did everything in their power to admit as little as possible. But they still had to admit this.
2) Did the authors do this intentionally?
Yes, though JAR denies it (“we have found no evidence that the authors intentionally misrepresented their data..."). Well… duh. They didn’t find any evidence because they weren’t looking for any evidence. It was a sham investigation.
Even if the authors didn't know the data was fake (which they did — Lisowsky's prior papers make that clear, and this is undergrad level knowledge), word on the street is that it was brought to the attention repeatedly prior to publication.
As a reward for their fraud, JAR invites Minnis and Lisowski to plagiarize the whistleblower's identification of their fraud: “we have encouraged LM to compile a short research note explaining the independence concern in the tax return data, which would be published in JAR.” So... they commit research misconduct and get a free second publication in JAR for their CVs.
This paper should be retracted. The refusal to retract this paper violates Wiley’s ethical guidelines: "Journals should consider retraction when errors are so fundamental that they invalidate the findings." How is that not the case here?
JAR sees the fraud, the fraud is clear, and they just deny and ignore it in a non-transparent way that is clearly designed to protect the system, in a way that discourages future whistleblowers, and in a way that does not foster academic debate or integrity.
Ryan Enos Tangent
Sidenote: This concern was brought to the JAR team by an anonymous whistleblower, and JAR immediately investigated and responded to the whistleblowers’ concerns. If journal editors receive allegations of misconduct via email, they should investigate them, whether the allegations were signed or not.
They should be given credit for this at least, doing the bare minimum. Credit where credit is due. This stands in stark contrast to the American Journal of Political Science (AJPS). My Ryan Enos investigation found he clearly faked his AJPS data:
EXCLUSIVE: Leaked Report Shows Harvard Professor Fabricated Data
Pressure Mounts on Harvard Professor to Come Clean Over Fraudulent Data
I have 2 more upcoming articles on the same subject. Stay tuned.
AJPS refuses to accept my complaint on the grounds that it was brought originally by an anonymous whistleblower. Never mind that I am now attempting to put my name to it. Never mind that Fox News is now attempting to put their name to it. They are refusing to investigate explicitly because the person who originally pointed it out is anonymous. It is shocking that they don’t understand it doesn't matter if the allegations are anonymous, it only matters if the allegations were actually sent to the journal. They are flatly engaging in corruption by refusing to investigate fraudulent data in their journal. The lead editors at AJPS who are responsible for this refusal to investigate are Dr. Kathleen Dolan and Dr. Jennifer Lawless:
Email (jll9jx@virginia.edu & kdolan@uwm.edu) and ask them why they are not investigating this blatantly fabricated data in their journals. They say, ostensibly, that they will accept a complaint from someone who isn’t me. Presumably, this means they will accept a complaint from an established academic. They are banking that no academic is willing to call them on their corruption — please email them and call them on their bluff.
Wrapping Up
This is the 4th academic scandal I have broken since I returned to Substack. It is literally too easy — there are soooo many fraudulent papers that I could spend the next 50 years writing about them, and not even make a dent. Here are some more scandals in the JAR and accounting profession:
https://econjwatch.org/articles/are-a-few-huge-outcomes-distorting-financial-misconduct-research
https://www.econjobrumors.com/topic/hrm-strategy-for-publishing-in-rfs
https://www.econjobrumors.com/topic/accounting-rupture-dealing-with-fraud-at-jar
Aren’t accountants the ones studying full disclosure and transparency? Turns out they are an entirely corrupt field, just like every other field in academia. The corruption is massive. As Thomas Prosser, an associate professor at Cardiff University, wrote this morning in his substack article What happens when the public lose confidence in academic findings?, “Within academia, such developments are well known. Yet public awareness is limited and few reflect on practical consequences for politics.” I will keep doing everything I can to boost public awareness of this corruption and fraud. Because integrity matters.