Search results

1 – 10 of over 36000
To view the access options for this content please click here
Article
Publication date: 6 November 2017

Anatoli Bourmistrov

The purpose of the study is to examine whether public servants as users of accounting information are responsive to changes in the content of an accounting report and, if…

Abstract

Purpose

The purpose of the study is to examine whether public servants as users of accounting information are responsive to changes in the content of an accounting report and, if so, how responsive they are.

Design/methodology/approach

The study applies a theoretical framework, linking accounting information and accounting use by focusing on users’ “mental models”. The empirical context for the study is a municipality located in Northwest Russia. Three public servants were followed over several days for the purpose of studying their use of a formal accounting report. Later, those users were also presented with a different version of the same accounting report that was re-constructed by the researcher based on normative accounting theory. The study documents the responses of public servants and presents those in a narrative form.

Findings

The study reveals that though the original formal financial accounting report is extensively used, the public servants mostly reject the usefulness of the modified version of the report. The modified accounting report puts public servants in a “discomfort” zone, where the users’ mental models come in conflict with the information in the modified report. Following that, the study uncovers that the use of the traditional accounting report is based on three different mental models developed by users over time and guiding the use of accounting. Those mental models are described by three metaphors: “balanced matrix”, “water tank” and “fair rules”.

Originality/value

There is an unreasonable expectation that change in the public sector accounting system from cash toward accrual information will improve the quality of decision-making by public servants. The claim needs evidence that change in the accounting information supply will actually lead to change in information use. The paper demonstrates that change in use requires more substantial change in the users’ mental models. This change is difficult, time-demanding and requires the development of tailor-made training programs. The paper is also a response to van Helden’s (2016) call for more observational studies that can give a more accurate picture of use.

Details

Pacific Accounting Review, vol. 29 no. 4
Type: Research Article
ISSN: 0114-0582

Keywords

To view the access options for this content please click here
Article
Publication date: 13 May 2020

Hersh Shefrin

There was unfinished business to address in the version of the planner–doer model developed in Thaler and Shefrin (1981). The unfinished business involved identifying and…

Abstract

Purpose

There was unfinished business to address in the version of the planner–doer model developed in Thaler and Shefrin (1981). The unfinished business involved identifying and modeling the crucial roles played by temptation and mental accounting in pensions and savings behavior. The present paper has two objectives.

Design/methodology/approach

The first objective is to describe the key lessons learned in transitioning from the model in Thaler and Shefrin (1981) to the model in Shefrin and Thaler (1988), a transition which addressed some of the unfinished business. The second objective is to describe as yet unfinished business associated with developing a multicommodity, intertemporal version of the planner–doer framework, incorporating the concepts of temptation and mental accounting, to replace the neoclassical theory of the consumer.

Findings

Doing so will provide a theoretical foundation for nudges related to household budgeting, spending, saving, borrowing and investing.

Originality/value

This paper presents the first behavioral theory of the consumer, focusing on the manner in which consumers actually make decisions about budgeting, spending. borrowing and saving. The approach in the paper can be viewed as a behavioral counterpart to the neoclassical theory of the consumer. In contrast to the neoclassical approach, which assumes that consumers set and follow utility maximizing budgets, the empirical evidence indicates that only a small minority of consumers describe themselves as setting and following budgets. The behavioral theory presented here focuses on the heuristic nature of consumers' actual budgeting processes and extends the approach described in Thaler and Shefrin's 1981 seminal paper on self-control. The core of the present paper is a working paper which Shefrin and Thaler began in 1980, and as such represents unfinished business from that time. The first part of this paper describes earlier unfinished business from the 1981 framework that the authors subsequently addressed as they developed the behavioral life cycle hypothesis during the 1980s.

Details

Review of Behavioral Finance, vol. 12 no. 1
Type: Research Article
ISSN: 1940-5979

Keywords

To view the access options for this content please click here
Article
Publication date: 14 November 2019

Hassan A.G. Ouda and Ralf Klischewski

How do cognitive aspects influence the use/non-use of accounting information by the politicians? The purpose of this paper is to conceptualize and theorize the readiness…

Abstract

Purpose

How do cognitive aspects influence the use/non-use of accounting information by the politicians? The purpose of this paper is to conceptualize and theorize the readiness to use and the actual use of accounting information in relation to the human and social agency involved.

Design/methodology/approach

Applying cognitive fit theory and social cognitive theory, the authors explain how cognition of accounting information producers and users relates to their tasks and their environment. Analyzing cognitive matching, the authors develop accounting information usefulness as a function of the cognitive match between the accounting information producers and users.

Findings

The theoretical findings posit that cognitive fit increases with the degree of matching between the cognition of accounting information producers and the cognition of accounting information users. The theory proposes that enriching and matching the various cognitive factors lead to formation of more aligned mental representations to govern the processes of accounting information production and use as a prerequisite for the accounting information usefulness.

Research limitations/implications

By theorizing human cognition, behavior and learning, the authors seek to contribute to the explanation and prediction of accounting information use. Future research needs to empirically validate and/or further develop the propositions.

Practical implications

Practically, the conceptualization can be used to align individual and collective learning on both sides and to introduce information use audit as an instrument for supporting collective learning.

Originality/value

The theory of accounting information usefulness is the first attempt in public sector accounting literature to explain the relation of production and consumption of accounting information in relation to the cognition of the actors involved.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 31 no. 4
Type: Research Article
ISSN: 1096-3367

Keywords

Content available
Article
Publication date: 28 June 2021

Yangyi Zeng and Thomas Herzfeld

Mental budgeting, as a part of mental accounting theory, is expected to impact a household's budgetary management in terms of expenses. The purpose of this paper is to…

Abstract

Purpose

Mental budgeting, as a part of mental accounting theory, is expected to impact a household's budgetary management in terms of expenses. The purpose of this paper is to study whether and how mental budgeting can explain differences in farmers' reactions to different incentives of low-toxicity pesticide use.

Design/methodology/approach

Based on data from a survey of 393 vegetable farmers in the Sichuan Province, this analysis, using a Likert Scale approach, first explores whether farmers utilize mental budgeting. Secondly, using a Probit model, this paper analyzes how mental budgeting affects farmers' intentions to switch to low-toxicity pesticide use when faced with different incentives.

Findings

The results show that the majority of farmers categorize agricultural inputs into different groups and that 26.46% of the investigated farmers utilize mental budgeting for pest control practices. In addition, farmers who utilizing mental budgeting report a higher willingness to switch to low-toxicity pesticides when they're presented with a specific subsidy. Furthermore, if offered a price premium for quality, the willingness to switch to low-toxicity pesticides for farmers utilizing mentally budget is lower compared to other farmers.

Originality/value

This paper examines the existence of mental budgeting among farmers. It provides a better understanding of how farmers categorize agricultural inputs and their mental mechanisms with respect to agricultural expenses. Finally, this paper is the first to study the effects of mental budgeting on farmers' reactions to different incentives aimed at stimulating the adoption of low-toxicity pesticides.

Details

China Agricultural Economic Review, vol. 13 no. 3
Type: Research Article
ISSN: 1756-137X

Keywords

Content available
Article
Publication date: 26 March 2019

Renu Isidore R. and Christie P.

The purpose of this paper is to test the relationship between the annual income earned by the investors and eight behavioural biases exhibited by the investors such as…

Downloads
4444

Abstract

Purpose

The purpose of this paper is to test the relationship between the annual income earned by the investors and eight behavioural biases exhibited by the investors such as mental accounting, anchoring, gambler’s fallacy, availability, loss aversion, regret aversion, representativeness and overconfidence.

Design/methodology/approach

The relationship is derived based on a questionnaire survey conducted on 436 secondary equity investors residing in Chennai, India.

Findings

Analysis of variance test was performed on the normalised and non-normalised version of the biases divided in terms of the annual income earned by the investor. The test found that for the significant biases except the overconfidence bias, the investors with higher annual income were less prone to the biases when compared to investors with lower annual income. On the other hand, with respect to the overconfidence bias, the investors with higher annual income were prone to exhibit overconfidence bias when compared to the investors with lower annual income. Correlation analysis showed that the investors with high annual income were more likely to exhibit higher overconfidence bias but lower representativeness, loss aversion, availability and mental accounting biases.

Originality/value

A contribution in the financial and economic front which would benefit the financial advisors to now consider the income earned by the clients as an important factor while giving financial advice to the clients and while guiding them about the biases they are prone to exhibit.

Details

Journal of Economics, Finance and Administrative Science, vol. 24 no. 47
Type: Research Article
ISSN: 2077-1886

Keywords

To view the access options for this content please click here
Article
Publication date: 1 April 2015

Claudio Hoffmann Sampaio, Jefferson Dobner Sordi and Marcelo Gattermann Perin

This paper investigates the transaction decoupling phenomenon in purchase and consumption of football match tickets. The theoretical approach describes several economical…

Abstract

This paper investigates the transaction decoupling phenomenon in purchase and consumption of football match tickets. The theoretical approach describes several economical constructs behind individual decision-making behaviour, including sunk costs, mental accounting and coupling. Results indicate that people who buy bundled tickets are less likely to use their tickets than those who purchase individual ones. Furthermore, the phenomenon proved to be a valid theory in an actual Brazilian football ticket purchase and consumption scenario, confirming that rational elements can also be part of sports consumption. Thus, it can be stated that the type of purchase (bundle or single tickets) influences consumer decision-making.

Details

International Journal of Sports Marketing and Sponsorship, vol. 16 no. 3
Type: Research Article
ISSN: 1464-6668

Keywords

To view the access options for this content please click here
Article
Publication date: 11 July 2016

Line Lervik-Olsen, Tor Wallin Andreassen and Sandra Streukens

The purpose of this paper is to provide insight into the decision process behind whether customers complain, and to identify the effects of the situational factor credence…

Downloads
1531

Abstract

Purpose

The purpose of this paper is to provide insight into the decision process behind whether customers complain, and to identify the effects of the situational factor credence quality in this decision process.

Design/methodology/approach

A quasi-experimental design is used in which scenarios are applied in combination with a survey to test and to compare the model and its boundary conditions with existing consumer behavior models.

Findings

The mental-accounting process (theory of trying to complain (TTC)) seems to be a stronger predictor than mere attitude models (theory of planned behavior) when trying to explain intention to complain. Second, anticipated justice from complaint handling is a strong driver of intention to complain. Third, in both models, subjective norms are a strong predictor of intention to complain.

Practical implications

This study contributes to both theory and practice by extending existing theory and offering the TTC, and by providing practical insight for service managers.

Originality/value

To the best of the authors’ knowledge, the current study is the first to compare systematically two complaint approaches explaining complaint intention: the attitude model and the mental-accounting model.

Details

Journal of Service Theory and Practice, vol. 26 no. 4
Type: Research Article
ISSN: 2055-6225

Keywords

To view the access options for this content please click here
Article
Publication date: 1 January 2001

Wai Fong Chua, Cameron Hooper and Bobby Wai Yeong Mak

Much managerial and behavioural accounting research assumes that people are rational, self‐interested, expected‐utility maximisers. Often, this reduces to the central…

Abstract

Much managerial and behavioural accounting research assumes that people are rational, self‐interested, expected‐utility maximisers. Often, this reduces to the central expectation that individuals are concerned only with their own material self‐interest and are unconcerned with the welfare of others. Here, we consider a preference for achieving fair outcomes in the context of an interdivisional cost and benefit allocation scenario. Consistent with prior research, we reject a simple wealth maximisation hypothesis and find that subjects actively attempt to achieve fair allocations. Interestingly, subjects were willing to adversely affect the outcome of one party to the transaction when they considered themselves to have been treated unfairly by a third party against whom they had no redress. Also, where subjects expected to have their wealth reduced by another party, who freely chose not to do so, these subjects appeared willing to give a lower share of a future windfall gain to them.

Details

Asian Review of Accounting, vol. 9 no. 1
Type: Research Article
ISSN: 1321-7348

To view the access options for this content please click here
Article
Publication date: 9 June 2021

Alexander Quaicoe and Paul Quaisie Eleke-Aboagye

The finance literature is awash with papers bordering on the classical assumption that investors are rational in their decision-making, and hence, would always take…

Abstract

Purpose

The finance literature is awash with papers bordering on the classical assumption that investors are rational in their decision-making, and hence, would always take decisions rationally given the right information, thus making the stock market efficient. This assumption has, however, been found to be at least inadequate given the fact that investors are complex psychological beings full of emotions. This paper aims to investigate the psychological factors that tend to influence the decisions of investors.

Design/methodology/approach

The study used a questionnaire to survey a total of 350 investors holding stocks of listed banks on the Ghana Stock Exchange (GSE).

Findings

The study found the existence of various behavioural biases among the investors surveyed. The most dominant factor or bias found to be influencing investment decisions of respondents was herding with nearly 62% weight. Again, biases such as regret aversion and gambler’s fallacy were also found to strongly influence the decisions of investors, along with mental accounting, overconfidence and anchoring.

Practical implications

The presence of these behavioural biases, therefore suggests that investors do not always take rational decisions, and hence, making the stock market efficient and that as psychological beings, their investment decisions are impacted strongly by their psychology.

Originality/value

The study used a questionnaire to survey a total of 350 investors holding stocks of listed banks on the GSE with a special focus on overconfidence, anchoring, herding, gambler’s fallacy, mental accounting and regret aversion as the variables of interest, the first of its kind in Ghana.

Details

Qualitative Research in Financial Markets, vol. 13 no. 4
Type: Research Article
ISSN: 1755-4179

Keywords

To view the access options for this content please click here
Article
Publication date: 14 May 2019

Syed Aliya Zahera and Rohit Bansal

The purpose of this paper is to study the disposition effect that is exhibited by the investors through the review of research articles in the area of behavioral finance…

Abstract

Purpose

The purpose of this paper is to study the disposition effect that is exhibited by the investors through the review of research articles in the area of behavioral finance. When the investors are hesitant to realize the losses and quick to realize the gains, this phenomenon is known as the disposition effect. This paper explains various theories, which have been evolved over the years that has explained the phenomenon of disposition effect. It includes the behavior of individual investors, institutional investors and mutual fund managers.

Design/methodology/approach

The authors have used the existing literatures from the various authors, who have studied the disposition effect in either real market or the experimental market. This paper includes literature over a period of 40 years, that is, Dyl, 1977, in the form of tax loss selling, to the most recent paper, Surya et al. (2017). Some authors have used the PGR-PLR ratio for calculating the disposition effect in their study. However, some authors have used t-test, ANNOVA, Correlation coefficient, Standard deviation, Regression, etc., as a tool to find the presence of disposition effect.

Findings

The effect of disposition can be changed for different types of individual investors, institutional investors and mutual funds. The individual investors are largely prone to the disposition effect and the demographic variables like age, gender, experience, investor sophistication also impact the occurrence of the disposition effect. On the other side, the institutional investors and mutual funds managers may or may not be affected by the disposition effect.

Practical implications

The skilled understanding of the disposition effect will help the investors, financial institutions and policy-makers to reduce the adverse effect of this bias in the stock market. This paper contributes a detailed explanation of disposition effect and its impacts on the investors. The study of disposition effect has been found to be insufficient in the context of Indian capital market.

Social implications

The investors and society at large can gains insights about causes and influences of disposition effect which will be helpful to create sound investment decisions.

Originality/value

This paper has complied the 11 causes for the occurrence of disposition effect that are found by the different authors. The paper also highlights the impact of the disposition effect in the decision-making of various investors.

Details

Qualitative Research in Financial Markets, vol. 11 no. 1
Type: Research Article
ISSN: 1755-4179

Keywords

1 – 10 of over 36000