Professional Documents
Culture Documents
Volume 1, 1989
Printed in USA
Behavioral Accounting•
A Personal View*
Edwin H. Caplan
Untverstty of New Mexico
ABSTRACT
This paper presents personal views about the development of behavioral
accounting-how it evolved, where it is today, and where it might be going.
Behavioral accounting research emerged in the 1960s as accountants
began to apply concepts from the behavioral sciences in the setting of the
new business school philosophy of the time. The quality of research to date
has been mixed, but there have been some excellent contributions.
Suggestions for improving quality include (1) the establishment of a
research institute, (2) more joint research efforts with behavioral scientists,
and (3) a greater use of case studies. In the future, behavioral researchers in
accounting need to be concerned about the incorporation of behavioral
issues as an integral part of the accounting curriculum and greater
acceptance of their research findings in practice. The impact on practice of
behavioral research in accounting has been minimal, primarily because of
the prevalence of organizational attitudes that are inconsistent with the
findings of such research.
• Invited Paper.
109
III. Auditing
A. Behavior of individuals in an auditing environment.
B. Auditor judgment decisions.
IV. Human Resource Accounting
V. Social Accounting
VI. Accounting Information Systems and Human Information
Processing
The reader will note that, in the above classification, Items I through
III are consistent with the usual delineation of accounting activities.
Items IV through V1 represent areas of inquiry that may be applicable
in any accounting setting. While these later items might logically be
included in Items I-III. I consider them important enough to warrant
separate identification.
Before looking more closely at each of these areas, it might be
appropriate to raise what I consider to be the main theme of this
article. In my view. the crucial test of the success of research in
accounting relates to the extent that the findings of such research are
incorporated into the practice of accounting. Applying that test to
behavioral research today suggests that we still have a long way to go
before we can claim success. One prerequisite for achieving this
success may well involve improving the quality of the research. But
there already exist enough valid research studies and findings to
justify numerous applications in practice. A more important pre•
requisite is that practitioners believe it is in their best interest to
implement concepts from behavioral research in accounting. Unfortu•
nately. such an attitude does not yet seem to exist. We will examine
this issue at greater length later.
Financial accounting. With respect to financial accounting. the
research emphasis has been properly on the "user." Behavioral
research has examined such topics as user characteristics and
decision models as well as various alternatives for communicating
accounting information to users. Some attention also has been
devoted to the behavior of accounting policy-makers in interpreting
user needs. The current focus of research in this area seems
appropriate. However. future researchers will need to deal with two
important questions. The first is the extent to which the efficient
market hypothesis actually describes user behavior. If users can "see
through" accounting conventions and reporting practices then much
of the research on user reactions to financial statement data may be
unnecessary. It is unlikely that the efficient market hypothesis ts
consistently valid in its strong form, but the extent of its validity in any
form will certainly influence behavioral accounting research on
financial accounting matters. The second question has to do with the
behavioral effects of the financial information generated by the
RESEARCH QUALITY
Looking back on the evolution of behavioral accounting research,
several observations about research quality seem in order. The quality
of the research to date has been mixed. There have been some
outstanding contributions. but there have also been some rather poor
efforts. The most obvious examples of poor research are questionnaire
studies that are neither well worded nor rigorously designed and
which often have a sample size that is too small to be statistically
meaningful. Other examples relate to researchers who apply a favorite
methodological technique indiscriminately in analyzing a topic that
does not particularly lend itself to analysis by that technique. Still
other examples involve the use of elaborate quantitative analyses to
investigate issues that have little substantive content-Le .. they fail to
answer the fundamental question "so what?" Additionally. some
studies have not been very helpful in expanding our knowledge-either
becuase the issues were too narrow, or because the studies did not
demonstrate a sufficient grasp of the underlying behavioral concepts.
At a more general level, behavioral accounting research might
appropriately be described as a scattering of disjointed studies in
search of a model. Such models are difficult to formulate and. as in the
behavioral sciences generally, it is unlikely that any single overall
conceptual model can be developed for the behavioral role of
accounting. Nevertheless, a stronger theoretical framework. or set of
theoretical frameworks, is clearly needed to provide some direction to
individual research efforts.
While there is ample evidence to justify criticism of behavioral
research in accounting to date, such criticism should be kept in
perspective. The field is still quite new and the issues are complex.
Improvements in theory and methodology, as well as a more
sophisticated understanding and application of concepts from the
underlying disciplines, can be expected as behavioral research in
accounting matures. It is also important to recognize that all research
about human behavior is characterized by considerable uncertainty.
There is no single unified theory in psychology. Rather, there are a
IMPROVEMENTS IN QUALITY
First. perhaps it is time to establish a "Behavioral Research in
Accounting Institute." This Institute could provide a unifying force by
identifying significant research issues and sponsoring. or at least
encouraging, integrated studies to investigate these issues. The
appropriate location for such an Institute would be a major university.
Funding might be obtained from a combination of sources including
the university, government research grants. private firms. and
professional accounting organizations.
Second. accountants conducting behavioral research should at•
tempt to engage in more joint research activities with behavioral
scientists. Many behavioral researchers in accounting do not have the
in-depth understanding of behavioral concepts and methodologies
necessary for accomplishing truly significant work-but they do have a
comprehensive understanding of the accounting process. Combining
these two sets of talents is such an obvious way of raising the quality of
behavioral accounting research that it is hard to understand why there
have been so few joint efforts in the past. This suggestion for more
joint research activities is not meant to imply that accountants
interested in the behavioral role of accounting are incapable of doing
worthwhile research on their own. But it does imply that, if they
choose not to collaborate with behavioral scientists. they should
proceed cautiously and recognize their limitations.
Copyright© 2001. All Rights Reseved.
A Personal View 117
years. but I strongly suspect that most U.S. firms still follow the
management philosophy and practices described here. The changes
that have been made are either in the direction of more of the wrong
kind of control or are so superficial as to be meaningless. Managers
may have changed what they say about what they do, but it seems they
have not made very many changes in what they actually do.
Is it any wonder that behavioral accounting research has had so little
impact on practice? Such research often examines ways in which
accounting can contribute to Increased goal congruence and improved
employee and managerial motivation. Much of the findings of this
research suggest the need for accounting and management actions
that are inconsistent with a primary focus on short-run measures and
autocratic practices. Thus. it is likely that, no matter how rigorous the
research or how persuasive the findings. they will continue to be
ignored by most accountants and managers.
There is· another possible explanation for the lack of acceptance of
behavioral accounting by both academics and practitioners. We have
already noted that behavioral accounting research-indeed all behav•
ioral research-is characterized by a considerable amount of uncer•
tainty. Such research involves conflicting theories and numerous
ambiguities. The traditional accounting model. on the other hand, has
the appearance of a high degree of certainty. Debits always equal
credits. journals and ledgers always balance, and the concept of net
income carries with it the illusion of being a very precise amount. It is
at least possible that students who are attracted to the study of
accounting tend to be individuals who are more comfortable with
certainty than with uncertainty. Moreover. present-day accounting
education can be expected to reinforce this tendency to favor certainty.
The environment of accounting has changed tremendously from the
days when accountants were primarily concerned with performing
clerical tasks. but the education of accountants still seems to
concentrate on (increasingly complex) bookkeeping procedures. Thus,
as accounting students move on in their careers to become practi•
tioners (and academics). it is likely that many carry with them a need
for closure and an intolerance of ambiguity. If these assumptions are
correct, they may represent another reason for the apparent reluctance
of many practitioners and academics to incorporate findings from
behavioral research into the practice and teaching of accounting. I
have no solution to offer to this problem beyond stating the
obvious-the need to increase the intellectual and conceptual content
of accounting education.
CONCLUSION
To the extent that the observations set forth in these pages have
been critical, they have been more critical of the environment of