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

Abstract

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 Section 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.