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The theory of cognitive-conditional conservatism in accounting

Tipo
Artigos

Ano
10/09/2020

Linha de Pesquisa
Administração e Economia de Negócios

Autor(es)
Rodrigo de Oliveira Leite, Ricardo Lopes Cardoso

Orientador

https://www.coppead.ufrj.br/wp-content/uploads/2020/10/The-Theory-of-Cognitive-Conditional-Conservatism-in-Accounting.pdf


Mathematics, v. 8, n. 9. Abstract: Literature from multiple fields in psychology and economics have identified that impulsive individuals are more prone to riskier behavior and are less conservative. Accounting literature has studied conservatism for many years, and demonstrated that there are two roots of conservatism, one unconditional and another conditional to news available at decision-making. However, there is no bridge linking both. Using an analytical model, we show that the conservatism level of an accountant is lower for impulsive individuals because of their reduced focus on future consequences of their decisions, which is coupled with an increased focus on present consequences. Hence, we put forward a theory of “cognitive-conditional conservatism”, that is, a third root of conservatism. Additionally, we also prove the asymmetry property of this behavior.

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