What is the Impact of behavioral Sciences on financial accounting?

Answer 1

The term behavioural sciences is a discipline that explores the activities of and interactions among organisms in the natural world. It involves the systematic analysis and investigation of human and animal behaviour through controlled and naturalistic observation, and disciplined scientific experimentation.

Behavioural sciences includes two broad categories: neural-decision sciences-and social-communication sciences. Decision sciences involves those disciplines primarily dealing with the decision processes and individual functioning used in the survival of organisms in a social environment. These include anthropology, psychology, cognitive science, organisation theory, psychobiology, and social neuroscience.

On the other hand, communication sciences include those fields which study the communication strategies used by organisms and its dynamics between organisms in an environment. These include fields like anthropology, organisational behaviour, organisation studies, sociology and social networks.

Impact of behavioural science on Accounting

It is concerned with testing the effects of human psychological behaviour on strategic planning, budgeting, control, financial reporting, and decision-making in organisations. For example, a budget (and hence control and performance evaluation systems) has behavioural implications on everyone in an organisation: those who participate in preparing it, those who use it to assist in the decision-making process, and those who are evaluated using the budget. In addition, the quality of corporate financial reporting, particularly the quality of publicly reported earnings numbers, is influenced by the behaviour of managers who intentionally try to manipulate earnings for their own benefits, and in order to influences investors' psychological behaviours, which can also be affected by analysts' self-interests. Auditor's independence can also be weakened by auditors' self-interests and over-confidence, and so as managers.

The aim of this special issue is to publish high quality, innovative theoretical and empirical papers that promote the understanding of behavioural corporate accounting, in order to provide a platform for future research agenda.

Subject Coverage

The issue welcomes theoretical or empirical papers that explore managers, auditors, and regulators regarding corporate earnings quality. Topics include, but are not limited to:

• The effects of human behaviour and psychology on the quality of corporate financial reporting
• The effects of human behaviour and psychology on internal decision-making, internal control, performance evaluation, customer satisfaction, total quality management, and companies' performance
• The effects of human behaviour and psychology on investment decision-making
• The behaviour implications of budget
• The behavioural implications of activity-based costing
• Audit quality and over-confidence
• Internal control system and earnings quality
• Restructuring costs and earnings quality
• Corporate governance and earnings quality
• Merger and acquisition and earnings quality
• Sarbanes-Oxley Act and earnings management
• The effects of Sarbanes-Oxley Act on the decision of managers to cross-list in the US
• Analysts' earnings forecasts and earnings management/quality
• Audit quality/auditor's independence and earnings management
• The effect of IFRS introduction on earnings management of EU companies
• The market reaction to the introduction of IFRS in Europe
• International cross-listing and corporate disclosure
• The quality of the internet corporate reporting, and investors' reaction to it