Behavioural Accountancy

Abstract

This paper proposes the term Behavioural Accountancy (as opposed to Behavioural Accounting) for the study of potential behavioural errors from the use of accountancy and accounting rules and approaches by accountants, accounting-related consultants and their clients, all construed broadly.

Behavioural Accountancy would then be analogous to Behavioural Economics and Behavioural Finance and include the presence and impact of heuristics, standard and rule-of-thumb assumptions and behavioural practice, bounded rationality, and potentially sub-optimal outcome performance.

The areas of interest in Behavioural Accountancy could include appropriate and inappropriate reliance on accountants and accounting-related consultants, measurement errors of accounting variables, the impact of reliance and focus on accounting variables, any confusion of the accounting models and the underlying business, accounting arbitrage, and any confusion of i) accounting and accountancy and accounting-related consultancy with ii) economics and econometrics and financial engineering, and any parallel confusion of iii) accountants and accounting-related consultants with iv) economists, econometricians, financial engineers, statisticians and actuaries.

A fundamental question would be to what degree, if at all, the professional structures and crafts of accountancy and accounting-related consultancy can substitute for different, unprofessionalized but scientific disciplines, both in the minds of clients and in terms of optimal outcomes. If there were such long term substitution and over-reliance on accountancy and accounting-related consultancy, then what other system features could make this a long term, if potentially inefficient, equilibrium?

Keywords: behavioural accountancy, behavioural accounting, behavioural economics, behavioural finance