Mitigating the Mental Accounting cognitive bias through Instruction

Iranian Journal of Accounting, Auditing and Finance

مقالات آماده انتشار، پذیرفته شده، انتشار آنلاین از تاریخ 16 خرداد 1402   

نوع مقاله: Original Article

شناسه دیجیتال (DOI): 10.22067/ijaaf.2023.82084.1319

نویسندگان

mona parsaei^{* 1}؛ mahnaz molanazari²؛ Bita Mashayekhi³؛ farzane jalalialiabadi⁴

¹Assistant Professor, Department of Accounting, Faculty of social sciences and economics, Alzahra University, Tehran, Iran

²Associate Professor, Department of Accounting, Faculty of social sciences and economics, Alzahra University, Tehran, Iran

³Associate Professor, Department of Accounting, Faculty of Management, University of Tehran, Tehran, Iran

⁴Assistant Professor, Department of Accounting and Data Analytics, La Trobe Business School, Latrobe University, Bundoora, Victoria, Australia

چکیده

Purpose- This paper examines the effect of instruction to reduce the cognitive bias in capital investment decisions. For this purpose, first we investigate the possibility of costly decision errors in the use of mental accounting. Then, we use instruction in order to mitigate the bias.

Design/methodology/approach- Using an experimental methodology, we apply a 8x2 mixed factorial design to examine the effect of source of finance in the use of mental accounting and instruction.

Findings- The results show that managers engaging in mental accounting are less likely to part with a debt-financed asset instead of an equity-financed asset. More notably, instruction can be used to mitigate the cognitive bias.

Conclusion and contribution-The results of this research have implications for both academic researchers and practitioners. First, accounting education literature to date lacks enough instructional resources to assist students in developing essential professional judgment skills. Affiliated Finance, Business and Accounting faculties can allocate modules on mental accounting and related cognitive biases for post graduate students. Also, manufacturing industries can introduce employee training programs to reduce cognitive biases from mental accounting in capital budgeting environment.

کلیدواژه‌ها

Cognitive Bias؛ Instruction؛ Mental Accounting؛ Investment Decision Behavior؛ Judgment and Decision Making