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1 – 10 of over 1000Martin Kelly and Patricia Larres
Following recent high-profile audit failures, concern has been expressed that auditors are not demonstrating sufficient skepticism when exercising professional judgment. In…
Abstract
Purpose
Following recent high-profile audit failures, concern has been expressed that auditors are not demonstrating sufficient skepticism when exercising professional judgment. In particular, client assumptions and estimations relating to hypothetical valuations in financial reporting are not being challenged. This paper seeks to address the issue by advancing a decision-making framework aimed at guiding auditors beyond regulatory reductionist thinking towards an enhanced understanding of the cognitive processes which shape professional judgment in forming a reliable audit opinion.
Design/methodology/approach
Drawing on the normative philosophical and theological teachings of Bernard Lonergan, the authors' decision-making framework embodies reflective thinking and the data of consciousness to highlight the central role played by enquiry in the dynamics of understanding, judgment and decision-making. Such enquiry elicits challenge of the management bias inherent in hypothetical valuations.
Findings
Auditing through a Lonerganian lens allows auditors to reflect on their approach to objective decision-making by offering a set of cognitive tools to enhance the enquiry essential for nurturing professional skepticism.
Originality/value
This paper contributes to the literature by developing the somewhat neglected discourse on the cognitive processes essential for professional skepticism and audit judgment. The authors demonstrate how Lonerganian self-appropriation intensifies an awareness of the recursive cognitive activities pertinent to objective judgment and decision-making. This awakened consciousness has the potential not only to change how auditors question evidence to make informed judgments and decisions, but also to normalize the practice of challenge.
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This work aims to shed light on the cognitive biases that may have an influence on the strategic decision-making process, with a particular focus on those impacting both human…
Abstract
Purpose
This work aims to shed light on the cognitive biases that may have an influence on the strategic decision-making process, with a particular focus on those impacting both human resources (HR) standard activities within organizations and new innovative change management initiatives critical for them to survive.
Design/methodology/approach
This is a conceptual paper based on a literature review on cognitive biases and managerial decision-making. The conceptual approach is employed to outline how subjective cognitive barriers can undermine managerial decisions and, in particular, the objectivity of HR practices and change management initiatives.
Findings
The discussion emphasizes that cognitive biases are ever-present elements in the decision-making process of professionals, and they influence several areas of management including HR and change management.
Research limitations/implications
Limitations of the study concern the method adopted, as it is conceptual. The implications of the paper are relevant for supervisors and employees working in the HR and innovation/R&D departments in order to create awareness within the organizational contexts and limit the negative influence of these cognitive barriers during their daily activities.
Originality/value
The research contributes to the knowledge on HR management and decision-making process by combining literature findings with practical examples and tips suggesting how to avoid biases in the decision-making process regarding HR and change management.
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Fatemeh Khozaei, Claus-Christian Carbon, Mi Jeong Kim, Qamar Ul Islam, Wesam Beitelmal and Israr Ul Hassan
This research aims to investigate the impact of missing visual information on tourists’ decision-making processes and visit intention. Drawing on perception completion law and…
Abstract
Purpose
This research aims to investigate the impact of missing visual information on tourists’ decision-making processes and visit intention. Drawing on perception completion law and signaling theory, the study hypothesized that tourists might use visual information to infer about a destination, even if the information is incomplete or ambiguous.
Design/methodology/approach
To assess the impact of missing visual information, the authors asked a group of 392 participants who had no prior familiarity with a specific garden museum to envision the interior environment of the museum garden and provide feedback on their emotional responses and aesthetic evaluations. To aid in their imagination, they were presented with a video showcasing the surrounding landscape and exterior of the museum.
Findings
The study found that participants could anticipate their overall experience of the location by inferring the resemblance of unseen areas to the images they had viewed, even without prior exposure or information. This study provides valuable insights into the cognitive processes underlying tourism decision-making and advances our understanding of how people form expectations of new and unfamiliar places.
Originality/value
The originality of this research relies on the mediating role of missing aesthetics and emotion on the relationship between available aesthetics and visit intention using a structural model. This study highlights the significant role of visual information in influencing tourist decision-making, even with incomplete or ambiguous data.
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Ewa Wanda Maruszewska, Małgorzata Niesiobędzka and Sabina Kołodziej
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…
Abstract
Purpose
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.
Design/methodology/approach
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.
Findings
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.
Originality/value
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.
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Nicolas de Oliveira Cardoso, Eduarda Zorgi Salvador, Gustavo Broch, Frederike Monika Budiner Mette, Claudia Emiko Yoshinaga and Wagner de Lara Machado
This paper aims to identify the impacts of sociodemographic covariates on behavioural biases (BB) scores; the psychometric evidence of the BB measurement instruments; and the main…
Abstract
Purpose
This paper aims to identify the impacts of sociodemographic covariates on behavioural biases (BB) scores; the psychometric evidence of the BB measurement instruments; and the main BB that influences the decision-making of individual investors.
Design/methodology/approach
Papers were retrieved through search using keywords in ten databases. This systematic review is based on 69 peer-reviewed papers, most of which were published between 2017 and 2021. The relevance of the included papers was assessed through the analysis of statistical/psychometric methods used, and content analysis of the BB literature and its sociodemographic correlations.
Findings
Overconfidence is higher in men and not related to age. There was no consensus regarding the relationship between BB and other sociodemographic variables. Most measuring instruments are ad hoc, showing ≤ 4 types of psychometric evidence and assessing ≤ 9 BB. Therefore, the findings demonstrate that there is no gold standard instrument for measuring investors’ BB. Furthermore, 37 BB were cited as influencers of individual investors’ decision-making and overconfidence, herding, anchoring, representativeness and loss aversion were the most prevalent.
Research limitations/implications
Considering that very few systematic reviews have been published in the behavioural finance area, this paper highlights the current state-of-the-art and identifies significant gaps in the literature that can be explored by further research.
Originality/value
To the best of the authors’ knowledge, this is the first systematic review that analyses the psychometric properties of instruments used for individual investors BB assessment.
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Olasunkanmi James Kehinde, Jeff Walls, Amanda Mayeaux and Allison Comeaux
The purpose of this study is to propose and explore a conceptualization of decisional capital that is suitable for early career teachers.
Abstract
Purpose
The purpose of this study is to propose and explore a conceptualization of decisional capital that is suitable for early career teachers.
Design/methodology/approach
This study uses exploratory factor analysis on a sample of early career teachers to examine a literature-derived conceptualization of decisional capital.
Findings
The factors that emerged support the literature-derived conceptualization. A subsequent confirmatory factor analysis on a second sample of early career teachers offers additional evidence for the proposed conceptualization. An exploration of the underlying factor structure comparing results across four competing models (i.e. unidimensional, correlated factors, second order, and bifactor) suggests that a second order factor explains the variance across the three proposed factors well. We conclude that this second order factor is decisional capital.
Originality/value
This is the first study that examines the discrete elements of decisional capital. Understanding these discrete elements is an avenue for investigation into the development of decisional capital beyond the acknowledgment that it takes time to develop.
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Francesco Tommasi, Riccardo Sartori, Sara Bollarino and Andrea Ceschi
Decision-making competence (DMC) of entrepreneurs and managers is a longstanding topic in this increasingly globalized world. These figures operate in conditions not within their…
Abstract
Purpose
Decision-making competence (DMC) of entrepreneurs and managers is a longstanding topic in this increasingly globalized world. These figures operate in conditions not within their own control, and good levels of DMC are often considered to be desirable for the flourishing of business and society. This paper reports an empirical investigation on the DMC of entrepreneurs and managers, in an attempt to inform about their tendencies to incur in risky and costly choices.
Design/methodology/approach
Three cognitive biases associated with operational strategies and individual characteristics of entrepreneurs and managers, namely under/overconfidence (UOC, i.e. self-confidence in taking decisions), resistance to sunk costs (RSC, i.e. propensity to take cost investments) and consistency in risk perception (CRP, i.e. how well individuals understand probability rules) were considered . Cognitive biases measures were used in a cross-sectional study on a sample of n = 639 entrepreneurs and n = 512 managers. Data collected via online survey were analyzed using descriptive statistics and inferential statistics to determine differences among entrepreneurs and managers DMC.
Findings
Analyses reveal that entrepreneurs exhibit higher levels of UOC compared to managers with a marked presence of UOC among entrepreneurs at younger ages. Conversely, performance regarding RSC improves with higher education levels while age and RSC are positively correlated only for managers, regardless of education. Lastly, entrepreneurs and managers resulted as not being affected by CRP. This study discusses these results to provide initial insights for further avenues of research and practice.
Originality/value
The study offers an innovative, evidence-based viewpoint on how entrepreneurs and managers deal with risky and costly decisions. It offers an initial understanding of the role of UOC, RSC and CRP, that is specific cognitive biases associated with operational strategies and individual characteristics, in the DMC of these working figures. The study forwards avenues of scrutiny of quick-witted entrepreneurs and systematic managers.
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Hamzah Elrehail, Raed Aljahmani, Abdallah Mohammad Taamneh, Abdallah Khalaf Alsaad, Manaf Al-Okaily and Okechukwu Lawrence Emeagwali
This study explored the relationship between employees' cognitive capabilities and firm performance by exploring the moderating role of decision-making style and the mediating…
Abstract
Purpose
This study explored the relationship between employees' cognitive capabilities and firm performance by exploring the moderating role of decision-making style and the mediating effect of knowledge creation. Understanding the role of cognitive capabilities in value creation is crucial for human resource management to achieve the anticipated organizational performance.
Design/methodology/approach
Structural equation modeling, cognitive skills theory, cognitive skills acquisition theory and a knowledge creation framework were applied.
Findings
The first finding suggests that only A-shaped skills predict higher knowledge creation, while T-shaped skills do not. Second, knowledge creation predicts higher financial performance and a lower level of financial uncertainty. Third, T-shaped skills have no indirect effect on financial performance or financial uncertainty. Fourth, A-shaped skills exerted significant indirect effects on financial performance and uncertainty. Fifth, the rational decision-making style did not moderate the link between knowledge creation and financial performance, as opposed to the intuitive decision-making style.
Originality/value
A review of existing research indicates a lack of studies examining the effect of cognitive skills on organizational outcomes and contingencies under which cognitive skills lead to superior outcomes. This study advances research on T-shaped and A-shaped skills and knowledge creation by empirically exploring their interrelationships with financial performance. Managerial implications and suggestions for future research are also highlighted.
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Zhikun Ding, Wanqi Nie, Vivian W.Y. Tam and Chethana Illankoon
The preferences and adoption of recycled materials by consumers are subject to a variety of factors, such as enablers and barriers. Despite this, there exists a paucity of…
Abstract
Purpose
The preferences and adoption of recycled materials by consumers are subject to a variety of factors, such as enablers and barriers. Despite this, there exists a paucity of research concerning stakeholders' perceived value and real purchase decision towards recycled products. Consequently, this research study aims to fill this gap by investigating stakeholders' perceived value of recycled products derived from construction and demolition (C&D) waste and its effect on purchase decisions.
Design/methodology/approach
Research data were collected from 219 valid questionnaires completed by Chinese stakeholders. Structural equation modeling (SEM) was then employed to test eight hypotheses.
Findings
The results show intrinsic cue (materials) and extrinsic cue (brand) influence the stakeholders’ judgment on C&D waste recycled products’ value and then their purchase intention. However, cues such as quality, word-of-mouth, price, policy and advertised have not play a significant role in practice.
Originality/value
This research study verified the significance of brand and material cues on decision making for purchasing C&D waste recycled products, providing new insights to policy making to enhance the uptake of C&D waste recycled products in construction industry.
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Recent literature in the field of knowledge management (e.g. Nonaka and Takeuchi, 2021) asks for new, future-oriented approaches to strategy that allow us to deal with an…
Abstract
Purpose
Recent literature in the field of knowledge management (e.g. Nonaka and Takeuchi, 2021) asks for new, future-oriented approaches to strategy that allow us to deal with an increasingly complex world. Thus, this paper aims to build an approach to exploit aesthetics (human’s sensory perceptions and their felt meanings) to sense an organizations purpose and realize it by means of organizational strategy.
Design/methodology/approach
Conceptual paper, providing a new perspective on the perception of Organizational Purpose. The abductive argument follows Weick’s notion of Disciplined Imagination (Weick, 1989).
Findings
The main argument of this paper is that aesthetics contribute to the identification of organizational purpose. Thus, aesthetic perceptions can inform strategy to implement a stakeholders’ sense of purpose into strategy.
Research limitations/implications
The argument presented is grounded in recent literature on the concepts of purpose and aesthetics and abductive in nature. Thus, empirical research to validate the argument would be beneficial and worthwhile to be undertaken.
Practical implications
The paper presents the idea to integrate the sense of organizational purpose into a corporate strategy to address stakeholders’ value expectations and build more sustainable organizations. By emphasizing aesthetics, the study takes a stand for the inclusion of nonrational knowledge in organizational decision-making.
Originality/value
As far as the author’s knowledge goes, the concepts of aesthetics and organizational purpose have not theoretically been connected to each other. However, due to the implicit nature of purpose, aesthetics may serve as the matching knowledge tool to work with organizational purpose.
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