Using Psychology Theories in Archival Financial Accounting Research
58 Pages Posted: 27 May 2002 Last revised: 5 Jul 2008
Date Written: January 5, 2005
Abstract
Psychologists have studied human behavior for over a century and, as a result, have developed a robust set of theories regarding how people behave. Most financial accounting issues deal with matters of human behavior, such as the judgments and decisions of managers, investors, analysts, and auditors. Consequently, psychology offers a rich pool of theories from which financial accounting researchers can draw to motivate hypotheses and interpret results. Despite this, archival accounting researchers traditionally have relied almost solely on theories based in financial economics. We argue that two major obstacles to the use of psychology theories by archival researchers has been a lack of awareness about the theories that are available and when their use would be most productive. Our paper attempts to bridge this gap. Specifically, we describe a number of psychology theories that are applicable to financial accounting issues, lay out the circumstances where they may be especially useful to archival researchers, and provide a number of specific examples of how psychology theories provide new insights about financial accounting issues.
Keywords: voluntary disclosure, earnings management, analyst forecasts, attribution theory, prospect theory, motivated reasoning, expertise
JEL Classification: M41, M43, M45, G14, G29
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Experimental Research in Financial Accounting
By Robert Libby, Robert J. Bloomfield, ...
-
Comprehensive Income Disclosures and Analysts' Valuation Judgments
By D. Eric Hirst and Patrick E. Hopkins
-
Fair Values, Comprehensive Income Reporting, and Bank Analysts' Risk and Valuation Judgments
By D. Eric Hirst, Patrick E. Hopkins, ...
-
Purchase, Pooling, and Equity Analysts' Valuation Judgments
By Patrick E. Hopkins, Richard W. Houston, ...
-
Directional Preferences, Information Processing, and Investors' Forecasts of Earnings
-
The 'Incomplete Revelation Hypothesis' and Financial Reporting
-
Cheap Talk, Fraud and Adverse Selection in Financial Markets: Some Experimental Evidence
By Robert Forsythe, Russell J. Lundholm, ...