An Examination of the Impact of Alternative Accounting Procedures on Risk-Taking Behavior: A Test of Prospect Theory

Creator(s)

Morris H. Stocks, University of Mississippi
Martha M. Pointer, East Tennessee State UniversityFollow

Document Type

Article

Publication Date

Fall 2009

Description

Many business decisions which use accounting information are made under conditions of uncertainty and are biased, in part, on relative gains and losses. Therefore, accounting settings appear to be a particularily appropriate setting to test the predictions of prospect theory. To date, little accounting research has been conducted which has used prospect theory as its theoretical foundation. Using a discount period decision under risk, practicing accountants were asked to indicated he likelihood of making an inventory payment. The results of the study provide limited support fo prospect theory propositions. It also is interesting that the perceptions of and ethical conflict by subjects significantly impacts the likelihood assessments made by the subjects.

Copyright Statement

© 2009 JW Press. This document was published with permission by the publisher. It was originally published in International Journal of the Academic Business World.

Citation Information

Stocks, Morris H.; and Pointer, Martha M.. 2009. An Examination of the Impact of Alternative Accounting Procedures on Risk-Taking Behavior: A Test of Prospect Theory. International Journal of the Academic Business World. Vol.3(2). 11-20.