Accounting-based earnings management: motivations, players, implementation, and detection from the perspective of certified accountants

In the scope of Behavioral Decision Theory, Accounting-based Earnings Management (AEM) may compromise the success of decision making of a firm’s stakeholders. Given that AEM constitutes a barrier to the decision-making process, we aim to identify the main motivations of the players of AEM. Besides, in this study we also intend to analyze the implementing and detecting of AEM practices in financial statements and to evaluate whether individual characteristics influence the ability to implement and detect creative accounting practices. To achieve the proposed objectives, a quantitative methodology approach was used. A survey was applied to Portuguese’s certified accountants. In the data analyses, we applied the univariate and multiple analysis. Based on 159 observations, we find that most certified accountants indicate the main motivations are related to the reduction of the cost of capital and tax burden, the strength of the “code law system”, and that the managers are the main players. Our evidence also shows that the AEM practices are easily implemented and detected in the financial statements. In addition, we find that age, professional experience, and academic qualifications of the certified accountant tend to have an impact on the ability to implement AEM in the financial statements, contrary to gender and training area. Furthermore, gender and academic financial statements. This research is important for the development of the literature, entities that operate in accounting standardization and for the users of accounting and financial information. This study contributes to a better understanding of AEM practice, and it originally combines individual characteristics of accounting professionals with AEM practice.

Evolutionary Dynamics of Mandatory Lane Changing for Bus Exiting

With the development of the connected autonomous bus, the interactions between the bus and social vehicle during the mandatory lane changing for bus exiting become more diverse and complex. This research investigates the evolutionary dynamics of behavioral decision-making for the bus and social vehicle in different scenarios. The evolutionary game model for the connected autonomous bus and social vehicle is built, as do the human-driven bus and social vehicle, and the connected autonomous bus under different penetration rates and social vehicle. The results of numerical experiments reveal that the connected autonomous bus chooses to change lanes in most instances, and the strategies of the human-driven bus show conservative tendencies. Such tendencies are weakened when the connected autonomous bus and human-driven bus are mixed. As for the social vehicle in different scenarios, the strategies that balance overall traffic safety and efficiency are promoted. This research provides some references for intelligent decision-making of lane changing in urban public transportation.

Behavioral decision research is not a Linda problem: Comment on Regenwetter, Robinson, and Wang (in press)

Regenwetter, Robinson, and Wang (in press) argue that research on decision making is plagued with conjunction fallacies or “Linda Effects”. As a case study, they provide a critical analysis of Kahneman and Tversky’s seminal paper on Prospect Theory and its 1992 sequel. This commentary evaluates their criticisms and ultimately finds them to be predicated on a number of misconceptions. As argued below, a reliance on stylized effects at the aggregate level is perfectly legitimate when dismissing a received view and first proposing a new account that organizes said effects in theoretically-meaningful ways.

Conceptualizing Cuvée Organizations: Characteristics Leading towards Sustainable Decision-Making Practices

This paper discusses the role and responsibility of business organizations in a sustainability transition with a thought-provoking hypothetical construct, the cuvée organization. The aim of the paper is to introduce and conceptualize this normative concept on what sustainable and responsible business would look like in an ideal world—more specifically, which meta features should characterize a business organization that is designed for sustainability? It also tests the concept’s applicability to a micro-process, an everyday challenge any organization aiming for sustainability would face, namely discounting. The concept of the cuvée organization emerged from participatory backcasting, a normative scenario-building exercise conducted with a sustainability expert panel. In this co-creative process, the panel capitalized on the metaphor of cuvée wine and winemaking, which provided the cognitive means to chart the unknown. The emerged concept of the cuvée organization stands for a business archetype which is designed to serve a prosocial cause, subordinating activities and structural features accordingly. When applying this construct to discounting, our approach lies with ecological rationality in behavioral decision making as well as the practice-based approach of corporate strategy research. In this theoretically rigorous effort, we aim to show which meta-characteristics could support an organizational structure leading to better decision making, aiming to avoid various forms of temporal and spatial discounting. The originality of the research is filling the normative vision with details through the conceptualization of the cuvée organization. On the level of methodologies, our research contributes to understanding the novelty and applicability of backcasting processes and provides an astounding example for the use of metaphors in future studies.

Blind Obedience to Environmental Friendliness: The Goal Will Set Us Free

In the past, researchers focusing on environmentally friendly consumption have devoted attention to the intention–action gap, suggesting that consumers have positive attitudes toward an environmentally friendly product even though they are not willing to buy it. In the present study, we borrow insights from the behavioral decision making literature on preference reversal to introduce an opposite phenomenon—that is, consumers buying an environmentally friendly product even though they do not evaluate it highly. We further rely on the research on goals to hypothesize that choice–evaluation discrepancies disappear when consumers pursue an environmentally friendly goal. A two (Mode: Choice vs. Evaluation) by three (Goal: Control vs. Quality vs. Environmentally friendly) between-subjects experimental design was used to test the proposed hypotheses. Our findings obtained from 165 undergraduate students in Korea showed that, first, 76% of the participants chose an environmentally friendly cosmetic product whereas only 49% of the participants ranked it higher than a competing product, and, second, when participants read the sentence “You are now buying one of the two compact foundations in order to minimize the waste of buying new foundations,” the discrepancy disappeared (64% vs. 55%). Our experimental findings advance academic discussions of green consumption and the choice–evaluation discrepancy and have practical implications for eco-friendly marketing.

Transcriptional Correlates of Chronic Alcohol Neuroadaptation in Drosophila Larvae

When presented with the choice, Drosophila melanogaster females will often prefer to lay eggs on food containing a significant amount of alcohol. While, in some cases, this behavioral decision can provide a survival advantage to the developing larvae, it can also lead to developmental and cognitive problems. Alcohol consumption can affect executive functions, episodic memory, and other brain function capacities. However, in the fruit fly, the initial cognitive effects of alcohol consumption have been shown to reverse upon persistent exposure to alcohol. Using an olfactory conditioning assay where an odorant is implemented as a conditioned stimulus and paired with a heat shock as an unconditioned stimulus, a previous study has shown that when exposed to a short acute dose of alcohol, Drosophila larvae can no longer learn this association. Interestingly, upon prolonged chronic alcohol exposure, larvae seem to successfully avoid the conditioned stimulus just as well as control alcohol-naive larvae, suggestive of alcohol-induced neuroadaptations. However, the mechanisms by which Drosophila adapt to the presence of alcohol remains unknown. In this study, we explore the transcriptional correlates of neuroadaptation in Drosophila larvae exposed to chronic alcohol to understand the genetic and cellular components responsible for this adaptation. For this, we employed RNA sequencing technology to evaluate differences in gene expression in the brain of larvae chronically exposed to alcohol. Our results suggest that alcohol-induced neuroadaptations are modulated by a diverse array of synaptic genes within the larval brain through a series of epigenetic modulators.

Behavioral Decision Making in Normative and Descriptive Views: A Critical Review of Literature

Recent studies on decision analytics frequently refer to the topic of behavioral decision making (BDM), which focuses on behavioral components of decision analytics. This paper provides a critical review of literature for re-examining the relations between BDM and classical decision theories in both normative and descriptive reviews. We attempt to capture several milestones in theoretical models, elaborate on how the normative and descriptive theories blend into each other, thus motivating the mostly prescriptive models in decision analytics and eventually promoting the theoretical progress of BDM—an emerging and interdisciplinary field. We pay particular attention to the decision under uncertainty, including ambiguity aversion and models. Finally, we discuss the research directions for future studies by underpinning the theoretical linkages of BDM with fast-evolving research areas, including loss aversion, reference dependence, inequality aversion, and models of quasi-maximization mistakes. This paper helps to understand various behavioral biases and psychological factors when making decisions, for example, investment decisions. We expect that the results of this research can inspire studies on BDM and provide proposals for mechanisms for the development of D-TEA (decision—theory, experiments, and applications).