Two minds and double entries: an application of cognitive psychology to corporate reporting
ISSN: 2049-372X
Article publication date: 15 June 2023
Issue publication date: 6 March 2024
Abstract
Purpose
An understanding of the role of decision-making has been emphasised since the seminal works on human information processing and professional judgements by accountants. The interest in these topics has been reignited by the increasing digitisation of the financial reporting and auditing processes. Whilst the behavioural research on accounting is well-established, the application of seminal works in cognitive psychology and behavioural finance is lacking, especially from recent research endeavours. The purpose of this paper is to provide a synthesis of theories relating to accounting behavioural research by evaluating them against the theories of cognitive psychology.
Design/methodology/approach
Using theory synthesis, this research draws seemingly isolated strands of research into a coherent framework, underpinned by cognitive psychology.
Findings
Evidence from accounting and auditing behavioural research is largely consistent with the psychology and finance research on cognitive limitations and errors. There remains a lacuna in accounting behavioural research on debiasing techniques. Such research, if underpinned by a single, cohesive theoretical framework, is likely to have practical relevance.
Research limitations/implications
The current research has theoretical implications for the accounting decision-making and uncertainty research. Areas for future research, based on identified gaps in the current accounting behavioural research, are also proposed.
Keywords
Acknowledgements
The author acknowledges Dr Ute Liersch, a Chartered Psychologist, for her input at the ideation phase of this research.
Citation
Sebastian, A. (2024), "Two minds and double entries: an application of cognitive psychology to corporate reporting", Meditari Accountancy Research, Vol. 32 No. 2, pp. 613-629. https://doi.org/10.1108/MEDAR-03-2022-1625
Publisher
:Emerald Publishing Limited
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