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Determining the Level of Accounting Conservatism through the Fuzzy Logic System


  • Čičak Josip

    (Faculty of Economics and Business, University of Rijeka, Rijeka, Croatia)

  • Vašiček Davor

    (Faculty of Economics and Business, University of Rijeka, Rijeka, Croatia)


Background: Using a variety of alternative accounting policies brings about different effects on the stated business results and the value of the company. Objectives: The objective of this paper is to develop a fuzzy logic solution for determining bias in financial reports on low-activity financial markets, and to find a method applicable to unquoted entities. Methods/Approach: A fuzzy logic system was developed using data on Croatian companies, the MatLab software, and the Mamdani fuzzy inference method. Results: The paper provides the summary of results obtained using a fuzzy logic system, and they indicate that the model has relevant validity. Conclusions: The model can serve as a stimulus for more detailed studies of biased financial statements elements. The fuzzy logic model should be further tested on a larger sample of companies classified based on their activity and under different business conditions.

Suggested Citation

  • Čičak Josip & Vašiček Davor, 2019. "Determining the Level of Accounting Conservatism through the Fuzzy Logic System," Business Systems Research, Sciendo, vol. 10(1), pages 88-101, April.
  • Handle: RePEc:bit:bsrysr:v:10:y:2019:i:1:p:88-101:n:7

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    Cited by:

    1. Vasicek, Davor & Cicak, Josip, 2019. "Back To The Core: Alternative Performance Measurement," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 10(2), pages 237-247.


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