A Fact-Oriented Approach In Macro-Case Analysis: A Section 385 Illustration

• Published in: Journal of applied business research Vol. 27; no. 5; pp. 15 - 31
• Main Authors: Chiang, Wei-Chih, Englebrecht, Ted D.
• Format: Journal Article
• Language: English
• Published: Laramie The Clute Institute 01.09.2011
• Subjects: Accuracy; Capital assets; Classification; Code Section 385; Debt; Decision making models; Decision models; Decision theory; Discriminant analysis; Equity; Equity financing; Judicial behaviour; Legal research; Opinion; Statistical analysis; Studies; Tax court decisions; Tax courts; U.S.A; United States > US
• ISSN: 0892-7626; 2157-8834
• DOI: 10.19030/jabr.v27i5.5589

Prior research has not adequately addressed the coding issue in macro-case analysis research. This study provides a fact-oriented approach ( in contrast to the traditional opinion-oriented approach) to deal with this issue. We argue that while a traditional opinion-oriented approach can reveal the influential factors considered by judges in the precedents, a fact-oriented approach provides a decision model with predictability which does not exist in an opinion-oriented approach. The differences between these two approaches are demonstrated by applying them to the Code S ection 385 dilemma (i. e. , the debt-equity classification ) . Results show that decision models developed by these two approaches are very different but with similar classification accuracy. Consequently, management and practitioners can use a fact-oriented approach as a supplemental method to the traditional opinion-oriented approach to predict the judicial outcome.