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

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.