accounting代写,专业代写accounting assignment
Our approach here is to understand rules and regulation as consequences of
specific psychological biases or social processes, rather than a generalized lack
of sophistication on the part of market players. Experimental accounting research
often identifies specific investor biases and proposes policies to address these
biases. In much accounting research, however, psychological effects are often only
implicitly recognized by referring to "unsophisticated" investors or "costs" of
processing public information. Direct consideration of psychological forces is
important because it ensures that the assumptions made about investor behavior
agree with the scientific evidence about how people actually behave.^
In empirical capital markets research, attributing a proposed market ineffi-
ciency to some generalized "lack of sophistication" of investors seems like only a
modest step toward explanation. There is a large body of evidence and theory from
psychology, economics, and finance about different types of biases or limitations
that investors are subject to, such as limited attention, overconfidence, and emo-
tional decision making. As a result, a growing empirical literature in finance tests
specific psychological hypotheses, such as the effects on asset prices of reduced
attention (e.g., DeliaVigna and Pollet 2009), distracting effects of competing news
(Hirshleifer, Lim, and Teoh 2009), and feelings (Hirshleifer and Shumway 2003;
Edmans, Garcia, and Norli 2007) on asset prices.accounting代写,专业代写accounting assignment
Similarly, behavioral models of capital market prices in economics, finance,
and to some extent in accounting have, in recent years, focused on the effects of
specific types of erroneous judgment or decision-making processes. Examples
include hyperbolic discounting (e.g., Laibson 1997), prospect theory (e.g., Barberis,
Huang, and Santos 2001), overconfidence (Daniel, Hirshleifer, and Subrahmanyam
1998; Scheinkman and Xiong 2003), and limited attention (Hirshleifer and Teoh
2003). Although some of the pioneering research in behavioral finance exploited
CAR Vol . 26 No. 4 (Winter 2009)The Psychological Attraction Approach to Accounting and Disclosure 1069
the modeling device of noise traders whose behavior is mechanically specified
(DeLong, Shleifer, Summers, and Waldman 1990), in the last decade the trend has
been toward endogenous investor decisions and basing assumptions about investor
behavior on evidence from psychology about how people think and decide.
Good rules for bad usersaccounting代写,专业代写accounting assignment
Behavioral accounting has identified biases (such as framing effects) or cognitive
constraints on information processing, and how these biases affect prices and audi-
tor decisions (e.g., Maines and McDaniel 2000; Libby, Bloomfield, and Nelson
2002). Behavioral accounting has also devoted considerable effort to normative
proposals for improving accounting rules and regulation (e.g., Kachelmeier and
King 2002; Hodder, Koonce, and McAnally 2001).accounting代写,专业代写accounting assignment
This is part of a common theme of practical observers, that investors are irra-
tional and need to be protected from their own biases and from exploitation by
firms or other professionals. With regard to mere error, behavioral economics and
finance scholars have pursued the normative project of designing rules tailored to
the capacities of individual investors or other naive players. Bad behaviors that
have been targeted include plunging retirement savings into company stock and
insufficient saving. With regard to exploitation, there is evidence of opportunistic
reporting and disclosure behavior by firms to exploit cognitively constrained
investors (see, e.g., Teoh, Welch, and Wong 1998a, accounting代写,专业代写accounting assignmentb; Healy and Wahlen 1999),
and theoretical analysis of how and why this occurs (e.g., Hirshleifer and Teoh 2003).
Our purposes here are different. Rather than performing normative analysis,
we examine a positive issue: what explains the structure of existing^ccounting
rules and regulation, and how it came about. An important example is the question:
when does accounting policy and regulation provide good rather than bad rules for
bad users? As pointed out by Waymire and Basu 2008, the normative research pro-
gram tends to take for granted that once scholars evaluate alternative policies, the
most desirable ones will be adopted. It is well understood that there is a problem of
lobbying by special interests. However, there is also a problem that psychological
bias can make bad rules seem appealing. Indeed, as discussed further below, the
ability of special interest groups to succeed in lobbying efforts is probably a conse-
quence of the limited attention and psychological biases of political participants.
Bad rules