Chapter Five – Methods of Data Collection

5.1 Introduction
5.2 Sources of Primary Data
5.3 Merits and Demerits of primary sources
5.4 Primary Data Collection Techniques
5.5 Sources of Secondary Data
5.6 Secondary Data Collection Techniques

Research Methods in Accounting and Finance Dr Takele Fufa 1

 Methods of Data Collection

Introduction
• Collection of data refers to a purposive gathering of
information relevant to the subject matter of the
study from the units under investigation.
• The method of data collection depends mainly upon
the nature, purpose and the scope of inquiry on one
hand and the availability of resources on the other
hand.
• The task of data collection begins after a research
problem has been defined and research design/plan
chalked out.
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 Methods of Data Collection

Sources of data
• There are two types of data that are collected
and analyzed in research endeavors. These are:
I. Secondary data
II.Primary data

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 I. Secondary sources of data
• Secondary data means data that are already
available i.e., they refer to the data which
have already been collected and analyzed by
some one else.
• Secondary data are collected by others and
used by others.
• Any data that has been collected earlier for
some other purpose are secondary data in the
hands of an individual who is using them.
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 Cont.
 Secondary data may either be published or unpublished
data. Usually published data are available in:
 Various publications of the central, state, or local
government
 Various publications of international bodies or their
subsidiaries or foreign governments
 Technical or trade journals
 Books, magazines and news papers
 Reports and publications of various organizations
 Reports of research scholars in different fields
 Public records and statistics, historical documents and
other sources of published information.

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 Cont.
Advantages and disadvantages of Secondary Data 
Advantages
• A major advantage of the use of secondary data is
that it is far more economical as the cost of collecting
original data is saved. In the collection of primary
data, a good deal of effort is required- data collection
form should be designed, and printed, field staff is to
be assigned and maintained until all the data have
been collected, the traveling expenses are to be
incurred, the sample design has to be selected, data
are to be collected and verified for their accuracy, and
finally all such data has to be tabulated. All these
activities would need large funds, which can be
utilized elsewhere if secondary data alone can serve
the purpose. Research Methods in Accounting and
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 Cont.
• The use of secondary data saves much of our time. This
leads to prompt completion of the report for which,
otherwise, primary data would have been required to be
collected.
• As one explores the availability of secondary data required
for one’s project, one finds, in the process that one’s
understanding of the problem has improved. One may
even have to change some of one’s earlier ideas in the light
of the secondary data.
• Secondary data can be used as a basis for comparison with
the primary data that have been just collected.
• Search for secondary data is helpful not only because
secondary data may be helpful but familiarity with such
data indicates the deficiencies and gaps. As a result, one
can make the primary data collection more specific and
more relevant to ones study.
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 Cont.
Disadvantages/Limitations 
 The unit in which secondary data are expressed
may not be the same as is required in the
proposed study.
 Even if the units are the same as those required
by the research project, the class boundaries
may be different from those desired.
• One does not always know how accurate the
secondary data are. In case the degree of
accuracy is high, the use of such dubious data
would determine the utility of our study.
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 Cont.

• In most cases, it is difficult to know with what degree

of care secondary data have been collected and
tabulated.
• A severe limitation in the use of secondary data is that
they may be somewhat out of date. A good deal of
time is spent in the collection, processing, tabulation
and publishing of such data and by the time the data is
available , they are already two or three years old. As a
result, the data are no longer up-to -date. The utility of
secondary data declines progressively as the time goes
by, and they are finally useful only historical purpose.

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 Cont.
Evaluating Secondary Data
• Since the use of secondary data is relatively
cheaper than that of primary data, it is advisable
to explore the possibility of using secondary data.
In this connection there following requirements
must be met. These are:
 Availability of Secondary Data: The first and
foremost requirement is that secondary data
must be available for use. At times, one may find
that secondary data are just not available on a
problem at hand. In such cases, there is no
alternative but to take resources to the collection
of primary data.Research Methods in Accounting and
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 Cont.
 Relevance/suitability of the data: Another precondition for the
use of secondary data is their relevance to the problem at hand.
Relevance means that the data available must fit the
requirements of the problem. This would cover several aspects:
– Unit of measurement should be the same as that in the problem at
hand.
– The concepts used should be the same as are envisaged in the
problem.
– The data should not be obsolete.
 Reliability of the data: The reliability can be tested by finding
out such things about the said data:
– Who collected the data
– What were the sources of the data
– Were they collected by using proper method
– At what time were they collected
– Was there any bias of the compiler
– What level of accuracy was desired? Was it achieved?

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 Cont.
 Accuracy: The other requirement is that the data
should be accurate. In this connection the
researcher should consult the original source.
This would not only enable one to get more
comprehensive information but would also
indicate the context in which data have been
collected, the procedure followed and the extent
of care exercised in their collection.
 Sufficiency: The data should be sufficient. If the
data are inadequate, then compliance with the
preceding requirements will be vain.
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 II. Primary sources of data
• Primary data are original observations
collected by the researcher or his agents for
the first time for any investigation and used by
them in the statistical analysis.
• Primary data are those data which are
collected as fresh and for the first time, and
thus happen to be original in character.

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 Cont.
Advantages of Primary Data
• The primary source gives data in greater details
compared to secondary sources. The secondary
sources often omit part of the information.
• More accurate. In the secondary source, there is
a possibility of mistakes due to errors in
transcription.
• The primary source includes definitions of terms
and units used. It is essential that the
investigators understand the meaning of units in
which data are recorded.
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 Cont.
Limitations of primary data
• The use of primary data is relatively expensive
than that of secondary data.
• It relatively consumes more time and effort.
• It requires development of data collection
instrument-which may be costly and time
consuming.
• May not appropriate when the research report is
required urgently.

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 Cont.
Methods of Primary Data Collection
• There are several methods of collecting primary
data, particularly in surveys and descriptive
researches. Important ones are:
 Observation method
 Questionnaires
 Schedules and
 Interview method
 Focus group discussions
 Case Study Method
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 1-Observation method
• It is the most commonly used method especially
in studies related to behavioral sciences.
• It is used to obtain both past and current data.
Although it is not possible to observe past
behavior, we may observe the results of such
behavior.

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 Observation …..
There are some advantages of observation
method of data collection:
• The direct observational technique enables the
investigator to record the behavior as it occurs.
• It can be used regardless of whether the
respondent is willing to report or not.
• It can be used even when it pertains to those who
are unable to respond, such as an infants and
animals.
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 Observation ……
There are some limitations as well to this method of data
collection
• One is unable to observe neither the past behavior nor one
observe a person’s future behavior because the act of
observation takes place in the present.
• Observation doesn’t help us in gauging a person’s attitude
or opinion or knowledge on a certain subject.
• The observational method is very slow and, therefore,
when a large number of persons are to be contacted, it
becomes unsuitable because of the longtime required for
this purpose.
• It is an expensive method
• The information provided by this method is very limited.
• Sometimes unforeseen factors may interfere with the
observational task.
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 2- Questionnaires method
• One of the steps in preparing to collect primary
data is developing the data collection instrument.
• Questionnaire is the most popular and common
types of data gathering instrument.
• In the past, the interview had been the most
popular data-collecting instrument. Recently, the
questionnaire has surpassed the interview in
popularity.
• A questionnaire consists of many questions (items)
printed or typed in a definite order on a form or
set of forms
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 Questionnaires ……..
Advantage of Questionnaires
The advantages of administering a questionnaire
instead of conducting an interview are:
• lower costs and time
• better samples
• standardization
• respondent privacy (anonymity)
• It is free from the bias of the interviewers, answers
are in respondents own words
• Respondents have adequate time to give well
thought out answers.
• Respondents, who are not easily approachable, can
also be reached conveniently.
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 Questionnaires ……
The primary disadvantages of the questionnaire
are:
 Non-returns
 Misinterpretation
 Validity problems
 It can be used only when respondents are
educated and cooperating
 The control over the questionnaire may be lost
once it is sent
 This method is the slowest of all.
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 Questionnaires ….
Contents of Questionnaires
1.the cover letter,
2.the instructions, and
3.the questions - must work together to have a
positive impact on the success of the survey.

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 Questionnaires ……
• The cover letter should explain to the respondent
about the purpose of the study and motivate him
to reply truthfully and quickly. If possible, it
should explain why the survey is important to
him, how he was chosen to participate, and who
is sponsoring the study.
• Also the confidentiality of the results should be
strongly stressed. A well written cover letter can
help minimize both non-return and validity
problems.
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 Questionnaires ….
• The cover letter should be followed by a clear set of
instructions explaining how to complete the
questions and where to return it. If the respondents
do not understand the mechanical procedures
necessary to respond to the questions, their
answers will be meaningless.
• The third and final part of the questionnaire is the
set of questions. Since the questions are the means
by which you are going to collect your data, they
should be consistent with your study plan. They
should not be ambiguous or encourage feelings of
frustration or anger that will lead to non-returns or
validity problems.
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 Questionnaires …..
Administering questionnaires
1. Mail Questionnaires: There are many advantages to
mail questionnaires.
– They are relatively inexpensive to administer.
– You can send the exact same instrument to a wide
number of people.
– They allow the respondent to fill it out at their own
convenience.
2. Group administered questionnaire. A sample of
respondents is brought together and asked to respond
to a structured sequence of questions.
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 Questionnaires …..

3. household drop-off: In this approach, a

researcher goes to the respondent's home or
business and hands the respondent the
instrument.

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 Questionnaires …..
Types of questionnaire
•As far as the format(nature) of the items in a questionnaires is
concerned, the questionnaire is classified as either Open-ended or
closed ended type.
1-Closed ended questions: Questionnaires that call for short or
check responses are known as Closed form or restricted type. They
include a set of questions to which respondents can reply in a
limited number of ways.
Most answers for closed ended questions are variables having two
or more discrete categories like:
•Nominal (male or female, good or bad, poor or rich)
• likert scales ( five scale mode- Strongly agree, agree, neutral,
disagree, strongly disagree)
•Interval scale- What is your age-10-14, 15-19, 20-24, 25-30
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 Questionnaires …..

2. Open ended questions: are unrestricted types

of questionnaires that calls for a free response
in the respondents’ own words.
• Often researchers use one of them exclusively
or both of them in combination.
• Each types of questionnaires has its
advantages and disadvantages.

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 Questionnaires …..
Features of good questionnaire: Below are some
helpful hints typical of those that appear most often
in- texts on question construction.
1. Keep the language simple.
2. Keep the questions short and readable
3. Keep the number of questions to a minimum.
4. Limit each question to one idea or concept.
Consider this question: “Are you in favor of raising
pay and lowering benefits?” What would a yes (or no)
answer mean?

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 Questionnaires ……
5. Do not ask leading questions.
6. Use subjective terms such as good, fair, and bad
sparingly/economically, if at all. These terms
mean different things to different people. One
person's “fair” may be another person's “bad.”
7. Allow for all possible answers. Avoid
dichotomous (two-answer) questions (except for
obvious demographic questions such as gender).
If you cannot avoid them, add a third option, such
as no opinion, don't know, or other.

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 Questionnaires ……
8. Avoid emotional or morally charged questions and too direct
questions
9. Formulate your questions and answers to obtain exact
information and to minimize confusion.
10. Include a few questions that can serve as checks on the
accuracy and consistency of the answers as a whole. Have
some questions that are worded differently, but are soliciting
the same information, in different parts of the questionnaire.
These questions should be designed to identify the
respondents who are just marking answers randomly or who
are trying to game the survey If you find a respondent who
answers these questions differently, you have reason to doubt
the validity of their entire set of responses. For this reason, you
may decide to exclude their response sheet(s) from the
analysis.
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 Questionnaires …..
11. Organize the pattern of the questions appropriately:
• Place demographic questions at the beginning of the
questionnaire.
• Have your opening questions arouse interest.
• Ask easier questions first.
• Ask information needed for subsequent question s first ( To
minimize conditioning, have general questions precede specific ones)
• Group similar questions together.
• If you must use personal or emotional questions, place them at
the end of the questionnaire.
• Thank the respondent at the beginning for allowing you to
conduct your study.
• Thank the respondent at the end for participating
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 Questionnaires method
12. Pretest (pilot test) the questionnaire.
• This is the most important step in preparing your
questionnaire. The purpose of the pretest is to
see just how well your cover letter motivates your
respondents and how clear your instructions,
questions, and answers are.
13. Have your questionnaire neatly produced on
quality paper. A professional looking product will
increase your return rate.

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 3- Schedules
• This method of data collection is very much like
the collection of data through questionnaire, with
little difference which lies in the fact that
schedules are being filled in by the enumerators
who are specially appointed for the purpose.
• These enumerators along with schedules go to
respondents, put to them the questions from the
proforma in the order the questions are listed
and record the replies in the space meant for the
same in the proforma.
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 Schedules
Advantages of schedules
• It can be adopted even in those cases where
informants are illiterates.
• It eliminates to a great extent the problem of
non-response.
• The enumerator can explain the significance of
the inquiry and the questions in the
questionnaire personally to the informants
and thus ensuring collection of accurate and
reliable information.
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 Schedules
Limitations of schedules
– The enumerator might be biased one and may not enter
the answers given by the respondents truthfully. He may
twist or suppress the information provided by the
informant.
– Where there are many enumerators, they may interpret
various terms in the questionnaire according to their
own understanding of the terms.
– The bias might be arising due to the state of mind of the
informant or the environment in which he is placed.
– This method is some what costly and time consuming
since it requires a large number of enumerators who are
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 Schedules
The important points of difference are as under:
• The questionnaire is generally sent through mail to
informants to be answered as specified in a covering letter,
but otherwise without further assistance from the sender.
The schedule is generally filled out by the research worker or
the numerator, who can interpret questions when necessary
• Questionnaire is relatively economical.
• Non-response is usually high in case of questionnaire.
• In case of questionnaire, it is not always clear as to who
replies, but in case of schedule the identity of the
respondent is known.
• The questionnaire method is likely to be slow than schedule.
• Personal contact is generally not possible in case of the
questionnaire method, but in case of schedules direct
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 4. Interviews
• Interviews are among the most challenging and
rewarding forms of data collection technique.
They require a personal sensitivity and
adaptability as well as the ability to stay within
the bounds of the designed protocol. Interviews
are far more personal form of data collection
than questionnaires and schedules.

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 4. Interviews
Types of Interviews
1.Face-to Face Interviews /Personal Interviews
In the personal interview, the interviewer
works directly with the respondent. Unlike
with mail surveys, the interviewer has the
opportunity to probe or ask follow-up
questions. And, interviews are generally easier
for the respondent, especially if what sought
are opinions or impressions.
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 4. Interviews
• Advantages of Personal Interviews
– It has the highest response rates.
– Quick response can be attained.
– Personal contacts are involved
– Follow up questions can be asked.
– It permits the longest questionnaire.
– Higher flexibility
– Interviewers can observe the surroundings and can use
non-verbal communication and visual aids.
– The interviewer can control who answers the questions.
– All types of questions can be asked including complex
questions using illustrations and extensive probes.

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 4. Interviews
Disadvantages of Personal Interviews
• Interviews can be very time consuming
• Interviews are resource intensive or very
expensive as training, travel, and supervision
cost are added.
• Interviewer bias is greatest.
• The interviewer’s wording, tone of voice,
appearance may matter.
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 4. Interviews
2. Telephone interview: Another type of interview is called
telephone interview. It is a popular survey method. Most of
the major public opinion polls that are reported were based
on telephone interviews.
Advantages
• Telephone interviews enable a researcher to gather
information rapidly.
• They allow for some personal contact between the
interviewer and the respondent.
• They allow the interviewer to ask follow-up questions.
• They are cheaper than the personal interview.
• No field staff is required.
• Representative and wider distribution
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 4. Interviews
Disadvantages
• Many people don't have publicly-listed telephone
numbers.
• People often don't like the intrusion of a call to their
homes.
• Telephone interviews have to be relatively short or
people will feel imposed upon.
• Noise may interrupt the process.
• Possibility of the bias of the interviewer is relatively
more.
• It is not suitable for intensive surveys where
comprehensive answers are required to various
questions.
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 GROUP/FOCUS GROUP INTERVIEWS
• Group interviews are efficient in that responses from
several subjects can be elicited simultaneously, thus
saving a considerable amount of time.
• In group interviews, the groups should be composed
of homogeneous people as far as possible, for
example, groups of similar grades, experience and
age to identify the group view. The views of one
group could then be compared with other groups.
• An advantage of group interviews is that differences
of opinion can be debated. This type of interview
offers the possibility of collecting a lot of information
very quickly
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 FOCUS GROUP INTERVIEWS
There are some problems which can arise and need to be guarded
against focus group
• Subjects may not participate, perhaps due to shyness. To
overcome this, giving material in advance and explaining the
background at the beginning of the session can help. Then
systematically ask each individual for his/her general views.
This helps to break the silence.
• Another problem is that one or two people dominate the
discussion. Here the facilitator should politely but firmly
request that they limit their opinions and let others have their
say.
• Also ‘group think’ can occur where subjects fall into line with
the group view, which can be established by the first to speak.

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 Case study
• A case study is deep and intensive study of a
particular social unit, confined to a very small
number of cases.
• Thus the field of study in the case study method
is limited but aims at studying all aspects of social
unit. It also seeks to determine social process; it
reveals the complexity of factors and indicates
their sequences and their relationships.
• Case study is a method of exploring and analyzing
the life of a social unit, be that social unit be a
person, a family, an institution, a cultural groups
or even an entire community.
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 Case study

• It is an approach which views any social unit as a

whole.
• Case study is a complete analysis and report of
the status of an individual subject with respect as
a rule to specific phases of his total personality.
• Case studies are usually characterized as
thorough examinations of specific social settings
or particular aspects of social settings including
varying details, psychological descriptions of
persons in those settings.
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 Case study

Sources of Data : Case studies are not limited to any single source of
data collection. A number of methods or techniques of data
gathering may be employed by the researcher such as:
• Observations of behavior, characters, and social qualities of the unit
by the researcher.
• Use of questionnaire, opinonnaires, inventories, checklists and
other psychological tests.
• Analysis of recorded data from news papers, schools, clinics, court
or other similar sources.
• Interviewing the subjects, friends, relatives and others.
However, the main sources of data include:
• Personal Documents and
• Life History

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 Case study

Personal Documents
• Most of the people keep personal records, documents,
letters and write their autobiographies or memories.
• These documents play an important role in the case study
as they contain description of the important events of the
life of the writer as well as his relations towards them.
• These documents may also contain the description of
events in which the narrator has played his part only as a
witness.
• Personal documents are very helpful in studying the
personality of the writer and his relations to different
circumstances of life as the writer is an identical part of the
group;

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 Case study

Life history
• Life history is the study of various events of
respondents’ life together with an attempt to find
their social significance.
• Life history data is generally gathered through
prolonged interview with the respondent use of
any written material about his life, conference at
specified intervals, experimental studies,
observations, post experimental interviews,
various tests on analysis of facts so collected in
order to draw vivid generalizations from them.
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 Case study

Characteristics of Case study Methods

• Case study is an approach which views a social unit as
a whole.
• Case study is a study of the unit in its wholeness.
• The social unit need not be an individual only but it
may be a family, a social group, a social institution, or a
community.
• Hence case study studies a single unit at a time. Only
one unit is selected for the purpose of investigation
among all the units of the universe. The unit can be a
person, a single incidence of his life or a whole nation,
empire, or a historical age.
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 Case study

• Since the case study is a descriptive research, no variables are

manipulated.
• In case study, the researcher gathers data usually through methods
of observation, interview, questionnaire, and other psychological
tests. Analysis of recorded data from news papers, court,
government agencies and other similar sources is not uncommon.
• It is intensive study-a penetrating, inclusive and intensive study of
an individual unit is conducted.
• It is mainly qualitative study in character because the majority of
the material viz life history, personal documents etc used for the
research is qualitative in nature.
• It is flexible. The researcher has the right to change, omit or distort
the variables under study keeping in view that the results are not
affected.

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 Case study

Advantages of case study: The main advantages

of case study method are
• It produces new ideas and fresh suggestions
• It helps in formulating a sound hypothesis
• It helps in exploring new areas of research.

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 Case study

Limitations of Case Study Method

• There is a tendency for a researcher to draw generalizations after studying
a few cases which may not be relevant to all the situations.
• Case study does not provide universal, impersonal and common aspects of
a phenomenon.
• Case study method is quite unsystematic in the absence of any control
upon the informant or the researcher.
• Case study situations are seldom comparable.
• It is difficult to apply the usual scientific methods
• There is enough scope of errors due to inaccurate observation, faulty
inferences, wrong selection of a case and misreporting.
• There is a temptation to ignore the basic principles of research. Because
quite often a personal relationship is developed between the researcher
and the unit studied and, therefore, objectivity is lost which is a very
harmful thing

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 Case study

Steps involved in Case study

• Selection of Cases and Identification of
Situations
• Collection and Recording Data
• Interpretation of Data
• Report Writing

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 Survey study
• Survey study is concerned with large or widely
dispersed groups of people/units as
contrasted with case study which tend to be
more intensive but on a smaller group.
• Surveys are carried out to make assertions
about the distribution of characteristics in a
population.

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 Survey study
Merits of Survey Methods
• Direct and close contact between researcher
and respondents.
• Greater objectivity-large numbers of field
workers are employed for data collection, it
avoids the possibility of personal bias and
enhances greater objectivity.
• surveys are based on actual observation
• Universal application
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