Confirmation bias in accounting judgments : The case for International Financial Reporting Standards for small and medium-sized enterprises

Journal article

Perera, Kaluthanthrige Dona Dinuja, Chand, Parmod and Mala, Rajni. (2020). Confirmation bias in accounting judgments : The case for International Financial Reporting Standards for small and medium-sized enterprises. Accounting and Finance. 60(4), pp. 4093-4119. https://doi.org/10.1111/acfi.12523
AuthorsPerera, Kaluthanthrige Dona Dinuja, Chand, Parmod and Mala, Rajni
Abstract

We conduct an experiment that investigates confirmation bias in the reporting judgments of accountants when applying International Financial Reporting Standards (IFRS) for small and medium-sized enterprises (SMEs). The results indicate that accountants’ judgments are biased towards the recognition and measurement principles of full IFRS when applying IFRS for SMEs. The results also suggest that confirmation bias in judgments can be mitigated by increasing accountants’ awareness of justification requirements and by using appropriate decision aids. These results are likely to be of interest to the 70-pluscountries that have adopted the SME standard and countries that continue to contemplate its adoption.

Keywordsconfirmation bias; International Financial Reporting Standards; small and medium-sized enterprises; reporting judgment; judgment justification
Year01 Jan 2020
JournalAccounting and Finance
Journal citation60 (4), pp. 4093-4119
PublisherJohn Wiley & Sons Australia, Ltd
ISSN0810-5391
Digital Object Identifier (DOI)https://doi.org/10.1111/acfi.12523
Web address (URL)https://onlinelibrary.wiley.com/doi/10.1111/acfi.12523
Open accessPublished as non-open access
Research or scholarlyResearch
Page range4093-4119
Publisher's version
License
All rights reserved
File Access Level
Controlled
Output statusPublished
Publication dates
Online09 Aug 2019
Publication process dates
Accepted2019
Deposited19 Jun 2024
Additional information

© 2019 Accounting and Finance Association of Australia and New Zealand

Place of publicationAustralia
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Related outputs

Users’ perspective on the usefulness of international financial reporting standards for small and medium-sized enterprises-based financial reports
Perera, Kaluthanthrige Dona Dinuja, Chand, Parmod and Mala, Rajni. (2023). Users’ perspective on the usefulness of international financial reporting standards for small and medium-sized enterprises-based financial reports. Meditari Accountancy Research. 31(5), pp. 1133-1164. https://doi.org/10.1108/MEDAR-03-2020-0809
Issues in the adoption of international financial reporting standards (IFRS) for small and medium-sized enterprises (SMES)
Perera, Kaluthanthrige Dona Dinuja and Chand, Parmod. (2015). Issues in the adoption of international financial reporting standards (IFRS) for small and medium-sized enterprises (SMES). Advances in Accounting. 31(1), pp. 165-178. https://doi.org/10.1016/j.adiac.2015.03.012