Question

Capital market and Behavioural Research in accounting and give recent exapmle

Answer 1

Capital market research helps us to understand how securities markets react to accounting information whereas behavioural research helps us to understand how people actually use and process accounting information.

capital market research focuses on macro level of aggregate securities market whereas behavioural research focuses on micro level of individual managers and firms.

capital market  research are based on economics and also based on the assumption that people behave like a rational wealth maximizer whereas behavioural market research is based on psychology, sociology and organizational theories and there is no assumption with regards to behaviour of people.

capital market research is undertaken after the application of an accounting method or release of accounting standard while behavioural market research is undertaken either before or after the application of accounting method or release of accounting standard.

capital market research focuses on aggregate effect of decision making by investors whereas behavioural market research focuses on decision making at the individual level.

Example of capital market research is to harmonise the accounting standards, accounting treatment of goodwill and equity

Example of behavioural market research is retail marketing. In retail marketing,there will be two types of customers. One is customer with predetermined decisions to buy which product and the other is customer who search for the products and then make decisions. In this research, the second customer will be the target customer and he will tell us what people look for when searching for a product.