"Behavioral accounting research has generally been favored by accounting standards setters, as it enables them to...

"Behavioral accounting research has generally been favored by accounting standards setters, as it enables them to investigate how different classes of financial statement users will react to propose accounting standards."

Contrast behavioral research with capital market research

Expert Solution

Behavioral Accounting also known as Human Resource Accounting wihch takes into the account key decisions as a part of the value of the Comapny. The Behavioural Accounting is developed to examine how the accounting processes and procedures effect the users of financial statements and of personel working ini the organisation.

The users of financial Statements are

Company's Management, Investors, Suppliers, Lenders(Creditors), Government, Employees, Customers, Competitors etc These users will react in different ways to propose Accounting Standard

CONTRASTING BEHAVIORAL RESEARDCH WITH CAPITAL MARKET RESEARCH

Capital Market Research takes into the impact of accounting and the behaviours of the capital market but didnot explain the accounting practise. Capital market reseach in accouunting assumes semi strong form efficiency

There are two type of capital market research

1. Having impact of the release of the accounting information on the Share returns

1. The effects of changes in accounting policy of share prices.

In Capital Market Research asks in what ways do securities market react to accounting statements

and Behavioral Accounting asks in what ways do people use and process acounting information

Capital Market Leel Look at the macro level of the aggregate securitirs market where as Behavioral Reseach focus on the micro level of both Individual mangers and firms

Behavioral Research is basd on psychology sociology nad organisational theory where as the CApital Market Research is based upon economics

ekkarill92 answered 1 year ago

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