Asking AI to produce an F&A research proposal: on board of directors characteristics

Asking AI to produce an F&A research proposal: on board of directors characteristics (information from perplexity.ai)

My question 1: "Please suggest an Accounting and Finance research theme, via the lens of positivism, based on the following key words: board of directors characteristics (notably on the age, qualification genders of directors in Hong Kog listed companies [as independent variables), capital structure (as an independent variable) and return on equity of the Hong Kong listed companies [as dependent variable] (notably on the banking and retail sectors."

The reply: "A suitable positivist Accounting and Finance theme for your keywords is:

“The impact of board demographics and capital structure on return on equity: A positivist panel‑data study of Hong Kong listed banking and retail firms.”

Core positivist research theme

Under a positivist lens, you treat board characteristics and capital structure as objectively measurable causes, and return on equity (ROE) as an objectively observable effect. Your overall theme could be:

• To test whether board of directors’ demographic and qualification characteristics (age, gender diversity, educational/professional qualifications) and capital structure (e.g. leverage ratios) systematically explain variation in ROE among Hong Kong listed companies in the banking and retail sectors.

• To use hypothesis‑driven, quantitative methods (e.g. panel regression) to estimate the strength and direction of these relationships, assuming stable, law‑like regularities in how governance and financing choices affect performance.

Example title and variables

You could refine the theme into a working title such as:

• “Board demographic diversity, capital structure and firm performance: A positivist analysis of return on equity in Hong Kong’s banking and retail sectors.”

Key variables aligned with your description:

• Independent variables (board characteristics)

  • Average age of directors.

  • Proportion of female directors.

  • Proportion of directors with finance/accounting or postgraduate qualifications.

  • Board size, proportion of independent non‑executive directors, or CEO duality (optional extensions).

• Independent variable (capital structure)

  • Leverage ratio(s), for example: total debt to total assets, or total debt to equity.

• Dependent variable

  • Return on equity (ROE) of Hong Kong listed companies in banking and retail.

Positivist research questions and hypotheses

Within this theme, you can frame clear, testable questions:

• RQ1: To what extent do board demographic and qualification characteristics influence ROE of Hong Kong listed banking and retail firms?

• RQ2: How does capital structure influence ROE in these sectors?

• RQ3: Do board characteristics moderate or mediate the relationship between capital structure and ROE?

Illustrative hypotheses (directional, consistent with positivism):

• H1: A higher proportion of independent and financially qualified directors is positively associated with ROE.

• H2: Gender‑diverse boards (higher proportion of female directors) are positively associated with ROE.

• H3: Leverage (capital structure) has a non‑linear relationship with ROE, with moderate levels of debt associated with higher ROE and very high levels associated with lower ROE.

• H4: The positive effect of board quality (independence, qualifications) on ROE is stronger for firms with higher leverage.

Sector and Hong Kong focus

Focusing on Hong Kong banking and retail allows you to:

• Compare a highly regulated, capital‑intensive sector (banking) with a more consumer‑oriented, competitive sector (retail) under the same legal and listing environment.

• Exploit the relatively rich corporate governance disclosure and board diversity guidance for Hong Kong listed firms, which facilitates systematic data collection on board characteristics and capital structure.

This combination of board characteristics, capital structure and ROE, framed through hypothesis testing and statistical modelling, fits well with a positivist philosophy and is practical for an empirical Accounting and Finance dissertation."

My question 2: "Based on the research theme of "The impact of board demographics and capital structure on return on equity: A positivist panel‑data study of Hong Kong listed banking and retail firms.” for the period of 2024-2025 as mentioned above, please produce a dissertation proposal with the following information:

1. a dissertation project title 2. 3 research questions in the form a correlation hypothesis statement with 1 independent variable and 1 dependent variable. 3. Consolidate the three hypothesis statement into one multiple regression formula (i.e. 1 dependent variable [return of equity] 4. 2 research objectives 5. 2 research issues 6. 2 Hong Kong Finance and Admin practitioners' oriented issues. 7. 1 secondary research with multiple regression analysis as it main research method. 8. 3 relevant Finance and Admin. academic theories (with references stated in Harvard reference format) 9. Some brief comments on the academic, practical and originality values of this study"

The reply: "1. Dissertation Project Title

The Impact of Board Demographics and Capital Structure on Return on Equity: A Positivist Panel-Data Analysis of Hong Kong Listed Banking and Retail Firms (2024-2025).

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2. Three Research Questions as Correlation Hypothesis Statements

Each hypothesis links one independent variable (board demographic or capital structure) to the dependent variable (ROE), testable via correlation or regression under positivism.

• H1: Board gender diversity positively correlates with return on equity in Hong Kong listed banking and retail firms.
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• H2: Average board age negatively correlates with return on equity in Hong Kong listed banking and retail firms.
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• H3: Leverage ratio negatively correlates with return on equity in Hong Kong listed banking and retail firms.
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3. Consolidated Multiple Regression Formula

The three hypotheses consolidate into this multiple regression model, suitable for panel data analysis:

$RO{E}_{it}={\beta }_0+{\beta }_{1}GENDI{V}_{it}+{\beta }_{2}AG{E}_{it}+{\beta }_{3}LE{V}_{it}+{\beta }_{4}Control{s}_{it}+{ϵ}_{it}$

Where:

• $RO{E}_{it}$: Return on equity for firm $i$ in year $t$ (2024-2025).

• $GENDI{V}_{it}$: Proportion of female directors (gender diversity).

• $AG{E}_{it}$: Average age of board directors.

• $LE{V}_{it}$: Leverage ratio (e.g., total debt to assets).

• $Control{s}_{it}$: Firm size, growth, sector dummies.

• ${ϵ}_{it}$: Error term.​

4. Two Research Objectives

• To empirically quantify the strength and direction of relationships between selected board demographics, capital structure, and ROE using panel regression on Hong Kong banking and retail firms from 2024-2025.
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• To test for sector-specific differences in these relationships, informing positivist predictions on governance-performance links.
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5. Two Research Issues

• Limited availability of granular, time-series data on board demographics (e.g., exact ages, qualifications) for Hong Kong listed firms in 2024-2025, potentially requiring hand-collection from annual reports.
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• Potential endogeneity between board characteristics, capital structure decisions, and ROE, necessitating fixed effects or instrumental variable approaches in panel models.
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6. Two Hong Kong Finance and Admin Practitioners' Oriented Issues

• How can Hong Kong banking executives optimize board gender diversity and age profiles to enhance ROE amid rising leverage pressures in 2024-2025?
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• What capital structure adjustments should retail firm administrators consider, given board demographic influences, to sustain ROE in a high-interest environment?
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7. Secondary Research with Multiple Regression Analysis

This study employs secondary data from Hong Kong Stock Exchange (HKEX) annual reports and databases like Bloomberg or Refinitiv for 2024-2025. The main method is fixed-effects panel multiple regression to estimate the model in section 3, controlling for firm size (log assets), profitability (ROA), and growth (sales growth). Data covers all banking (Hang Seng sub-index) and retail firms listed on HKEX Main Board, yielding a balanced panel of approximately 20-30 firms per sector over two years. Robustness checks include random effects, clustered standard errors, and lagged variables to address autocorrelation.

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8. Three Relevant Finance and Admin Academic Theories

• Agency Theory: Board demographics and independence mitigate conflicts between managers and shareholders, influencing capital structure and performance (Jensen, M.C. and Meckling, W.H., 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), pp.305-360).
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• Pecking Order Theory: Firms prioritize internal financing over debt due to information asymmetry, with board characteristics affecting leverage choices and ROE (Myers, S.C. and Majluf, N.S., 1984. Corporate financing and investment decisions when firms have information that investors do not have. Journal of financial economics, 13(2), pp.187-221).
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• Trade-Off Theory: Optimal capital structure balances tax shields from debt against bankruptcy costs, moderated by board oversight in governance contexts (Kraus, A. and Litzenberger, R.H., 1973. A state-preference model of optimal financial leverage. The journal of finance, 28(4), pp.911-922).
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9. Brief Comments on Academic, Practical, and Originality Values

Academically, this positivist study extends board-capital structure-performance literature to Hong Kong's dual-sector context with 2024-2025 data, testing interactions via panel methods. Practically, it guides HK finance practitioners on board composition for ROE optimization amid post-2024 economic shifts. Its originality lies in sector-specific focus on recent Hong Kong data, addressing gaps in demographic-leverage interplay under local governance codes."

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