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This study aims to examine whether accounting knowledge is associated with a decision maker's tendency to ignore value added information in wealth measurement and distribution decisions.

A between‐subjects laboratory experiment was employed. Subjects prepared accounting reports that measured and distributed an entity's wealth based upon given accounting data. Accounting knowledge was measured as: a discrete variable by classifying subjects into high‐, low‐ and no‐accounting knowledge groups, and a continuous variable by classifying subjects on the number of accounting courses completed.

Findings provide empirical evidence that high levels of accounting knowledge interferes with a decision maker's ability to incorporate value added information (versus accounting profit) in wealth measurement and distribution decisions.

This experiment used subjects from the USA where the production and disclosure of a value added report is not mandated. The results should be tested in a country where the statement of value added is routinely produced, disclosed and audited.

This study shows the dysfunctional effect of accounting knowledge which appears to hinder performance in wealth measurement and distribution decisions.

This is the first attempt to explain why decision makers may ignore value added information in wealth measurement tasks and distribution decisions by focusing on the role of knowledge structures.

The study aims to investigate the impact of indirectly evoked incentives, in the form of supervisor’s preferences, on the decision about accounting policy regarding depreciation method selection and to examine subsequent post-decision distortion by evaluating the depreciation method.

The authors conducted two experiments with control and treatment groups, manipulating the supervisor’s indirectly evoked preferences. In Study 2, the authors also measured the evaluation of both depreciation methods to investigate post-decisional distortion regarding the assessment of the depreciation method chosen in a decision task. Study 1 was conducted among 85 accounting students, while Study 2 consisted of 200 accountants.

Both studies revealed the significant impact of supervisor’s indirectly evoked preferences on accounting policy decisions. Participants who were aware of supervisors’ preferences were more likely to choose the depreciation method that was consistent with those preferences. The authors also found that those participants attached a higher value to the depreciation method, providing evidence that adherence to the supervisor’s preferences results in a distorted assessment of the depreciation methods.

First, this study shows that indirectly evoked supervisors’ preferences may lead to a departure from substantive criteria resulting in low-quality accounting outcomes. Second, the assessment of the depreciation method is inseparable from the situational context, as the evaluation of the depreciation method is interdependent upon the preferences of the choice of a depreciation method and the fulfillment of those preferences.

Stakeholder theory research identifies changes in language as one possible mechanism to overcome the deficiencies of current accounting practices with regard to social aspects. This study aims to examine the effects of the terms used for specific accounts on company internal decision-making, drawing on the example of “value creation accounting”.

The study uses a survey based-experiment to analyze the effects of terms used for specific accounts on decision-making, with a focus on social aspects (in particular expenditures for staff) in cost reduction and expenditure decisions.

The findings indicate that wordings, which more closely relate to value creation than to costs, decrease cost reductions and increase the priority ascribed to the social aspect of reducing staff costs in times of financial shortage. The effects of terms used on cost reductions are stronger among female decision makers.

The analysis suggests that conventional accounting language best suits organizations that aim at incentivizing decision makers to primarily cut costs. By contrast, if an organization follows an approach that puts importance on social aspects in times of financial shortage and on not doing too sharp cost reductions, value creation-oriented language is the more effective approach.

The study suggests that the specific terminology used for accounts should be chosen more carefully and with awareness for the possible effects on cost reduction decisions as well as on social consequences.

This study contributes to a better understanding of the relevance of language in accounting. It suggests that the terms used for accounts should be chosen purposefully because of their far-reaching potential consequences for stakeholders as well as for the organization.

This paper aims to identify ethical challenges of using artificial intelligence (AI)-based accounting systems for decision-making and discusses its findings based on Rest's four-component model of antecedents for ethical decision-making. This study derives implications for accounting and auditing scholars and practitioners.

This research is rooted in the hermeneutics tradition of interpretative accounting research, in which the reader and the texts engage in a form of dialogue. To substantiate this dialogue, the authors conduct a theoretically informed, narrative (semi-systematic) literature review spanning the years 2015–2020. This review's narrative is driven by the depicted contexts and the accounting/auditing practices found in selected articles are used as sample instead of the research or methods.

In the thematic coding of the selected papers the authors identify five major ethical challenges of AI-based decision-making in accounting: objectivity, privacy, transparency, accountability and trustworthiness. Using Rest's component model of antecedents for ethical decision-making as a stable framework for our structure, the authors critically discuss the challenges and their relevance for a future human–machine collaboration within varying agency between humans and AI.

This paper contributes to the literature on accounting as a subjectivising as well as mediating practice in a socio-material context. It does so by providing a solid base of arguments that AI alone, despite its enabling and mediating role in accounting, cannot make ethical accounting decisions because it lacks the necessary preconditions in terms of Rest's model of antecedents. What is more, as AI is bound to pre-set goals and subjected to human made conditions despite its autonomous learning and adaptive practices, it lacks true agency. As a consequence, accountability needs to be shared between humans and AI. The authors suggest that related governance as well as internal and external auditing processes need to be adapted in terms of skills and awareness to ensure an ethical AI-based decision-making.

Compare and contrast how the accounting, organizational behavior and other literatures analyze sunk costs. Sunk costs form a key part of the decision-making component of the management accounting literature, which generally include previously incurred and unrecoverable costs. Management accountants believe, since current or future actions cannot change sunk costs, decision makers should ignore them. Thus, ongoing fixed costs or previously incurred sunk costs, while relevant for matters of accountability such as costing, income determination, and performance evaluation are irrelevant for most short- and long-term decisions. However, the organizational behavior literature indicates that sunk costs affect decision makers’ actions – especially their emotional attachments to the related project and the asymmetry of attitudes regarding the recognizing of losses and gains. Called the “sunk cost effect” or “sunk cost fallacy,” this conflict in sunk costs’ underlying nature reflects one element of incoherence in contemporary accounting discourse. We discuss this sunk cost conflict from an accounting and a philosophical perspective to denote some ambiguities that decision usefulness and accountability introduces into accounting discourse.

Review, summarize and analyze the above literatures

Managerial accountants can apply many lessons from the various literature sources.

We also show how differing opinions on how to treat sunk costs impact a firm’s decision-making process both economically and socially.

The increasing use of complex, nonfinancial environmental performance measures in managerial decisions motivates consideration of contextual influences that potentially impact managerial judgments in environmental settings. This study extends general evaluability theory (GET: Hsee & Zhang, 2010) to environmental accounting by investigating the combined effects of evaluation mode and incomplete supplemental evaluability information (SEI; e.g., benchmark data) on management decisions. To elaborate, evaluation mode is the display format in which the accounting information system (AIS) provides available information for analysis; e.g., a manager’s or business unit’s performance is assessed either comparatively (i.e., in joint mode) or individually (i.e., in separate mode). GET suggests more decision weight on measures containing SEI in separate mode because that evaluation mode contains less context in which to analyze information. On the other hand, more decision weight should result for measures that do not contain SEI in joint mode because that mode already contains more context for analysis (e.g., comparing multiple performances with each other). To test these predictions, experimental participants (n = 53) evaluated environmental measures for factories with similar environmental performances. To operationalize the information available in many environmental AIS, some, but not all, performance measures contained benchmark data (incomplete SEI); factories were evaluated either jointly or separately. Participants evidenced decision intransitivity; i.e., in separate evaluation mode, factories rated higher when a favorable measure contained SEI, while in joint evaluation mode, factories rated higher when a favorable measure lacked SEI. The results extend previous AIS and management accounting research by investigating contextual influences, and potential systems design elements, in judgments using environmental AIS.

This paper aims to provide a systematic review of literature pertaining to how executive behavioral characteristics relate to financial reporting decisions.

The authors review 44 papers published between 2001 and 2021 in top journals that are nested in leading business, economic and accounting journals.

Through the systematic review, the authors provide a framework for the emergence of narcissism and how it relates to decision making and hence, firm performance. Additionally, this paper identifies different measures of measuring narcissism with their pros and cons and suggest that different measures lead to different outcomes in prior literature.

The study contributes to a growing stream of research on executives' attributes influence on decision making. The authors recommend that future research may focus more on the chief financial officer (CFO) role as the majority of literature in CEO based. Additionally, the authors suggest that different settings may moderate the outcomes, and the authors propose that future research may be conducted to show how the regulatory environment affects or moderates narcissism effect.

The purpose of this paper is to propose a public policy solution to updating mainstream financial accounting from its nineteenth century roots and make it more relevant and consistent with public policy, individual investor motivations and global needs as exemplified in the sustainability development goals. Many approaches to integrating social and environmental accounts with financial accounts are additive; the two types of accounting information sit alongside each other. The opportunity to revise the basic building block of financial accounting, information to help investors make economic decisions relating to investments to increase integration and recognition that this is a public policy decision and not an accounting profession decision, is rarely considered.

The approach is a viewpoint on the opportunities for and benefits of integration of financial, social and environmental accounting.

The current basis of financial accounting does not reflect private investors’ motivations, and changing the basis of accounting is a public policy issue.

This is a viewpoint paper. The pros and cons of current approaches to valuation of social and environmental outcomes are not explored.

Changing policy would require support from asset managers and owners, accounting bodies, civil society and politicians and would need a plan for transitioning from the existing approach.

This is a possible starting point for formal research that could support policy changes that could result in resource allocation decisions taking account of social and environmental impacts.

There are several approaches for integrating social environmental and financial accounting; however, the proposal that integration would result from a change in public policy specifically clarifying and updating investor motivation provides a possible solution to many of the challenges of integration.

This paper aims to investigate the role of affect and tolerance of ambiguity on ethical decision-making of management and accounting students.

Weisbrod’s (2009) questionnaire on ethical decision-making in individual and organizational situations, McDonald’s (1970)16-factor questionnaire on tolerance of ambiguity and Watson et al.’s (1988) Positive and Negative Affect Schedule were used to study the students’ views toward research hypotheses. The population used in this study includes graduate and PhD students of accounting and management during the academic year 2014-2015. The number of samples is 398 and sample members selected using simple random sampling method. Hypotheses test using structural equation modeling in the AMOS software version 18.

Results of hypotheses shows that individual characteristics of positive and negative affect and tolerance of ambiguity have no effect on accounting students’ ethical decision-making, but there is a significant positive relationship between management students’ negative affect and ethical decision-making, and a significant negative relationship between management students’ increased level of tolerance of ambiguity and ethical decision-making. The findings also show that affect (positive and negative) and tolerance of ambiguity have no interactive effect on accounting students’ ethical decision-making, whereas among students of management, there is a significant relationship between interactive effect of negative affect and tolerance of ambiguity on ethical decision-making. The results show that there is a significant difference between students of management and accounting based on negative effects and tolerance of ambiguity on ethical decision-making.

The current paper is almost the first paper which was conducted in developing countries.

The effect of affect in accounting contexts has recently attracted interest, but numerous questions still remain. Given that affect can significantly impact a variety of accounting judgments and decisions in theoretically different manners, the purpose of this synthesis is to understand the state of extant accounting literature in affect and identify directions for future research.

This synthesis systematically reviews experimental accounting papers related to affect in both theoretical and functional respects. The authors first elaborate on the affect infusion theory as the theoretical foundation for the synthesis. The authors then present the sampling method. In Section 4, the authors conceptually and factually summarize affect accounting papers in terms of four major functional areas: auditing, managerial/corporate accounting, tax and financial accounting. The implications of moderators examined in some papers are also discussed. Finally, the authors conclude by revisiting the importance of affect in accounting contexts.

Throughout the synthesis, the authors provide future research opportunities with respect to theories, each functional area and other gaps in the accounting literature.

This synthesis contributes to the accounting literature by providing a pathway to understand the development of accounting research on affect, integrating theoretical foundations and offering future research opportunities to advance the literature.