IDEAS home Printed from https://ideas.repec.org/a/taf/accfor/v49y2025i2p449-471.html

The effects of cognitive reflection and work experience on financial statement comparability under principles-based accounting standards

Author

Listed:
  • Leonardo P. Barcellos
  • Ricardo L. Cardoso
  • Rodrigo de O. Leite

Abstract

This study examines the influence of cognitive reflection and work experience on certified public accountants’ (CPAs’) classifications of assets and cash flows under principles-based accounting standards and, ultimately, on the comparability of the resulting financial statements. We explore the overlapping guidance provided by the International Financial Reporting Standards on audiovisual content (AVC) classifications to experimentally show that CPAs who are high (versus low) in cognitive reflection make less noisy choices when classifying assets and cash flows. CPAs high in cognitive reflection are also more likely than others to recognise cash flows from AVC assets as operational regardless of the asset classification. We also find that experience in listed, large, or audited firms reduces noise in CPAs’ classifications of cash flows, but it is unlikely to affect their classifications of assets.

Suggested Citation

  • Leonardo P. Barcellos & Ricardo L. Cardoso & Rodrigo de O. Leite, 2025. "The effects of cognitive reflection and work experience on financial statement comparability under principles-based accounting standards," Accounting Forum, Taylor & Francis Journals, vol. 49(2), pages 449-471, March.
    • Handle: RePEc:taf:accfor:v:49:y:2025:i:2:p:449-471
    DOI: 10.1080/01559982.2023.2285637
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/01559982.2023.2285637
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01559982.2023.2285637?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    2. Oechssler, Jörg & Roider, Andreas & Schmitz, Patrick W., 2009. "Cognitive abilities and behavioral biases," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 147-152, October.
    3. Gus De Franco & S.P. Kothari & Rodrigo S. Verdi, 2011. "The Benefits of Financial Statement Comparability," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 49(4), pages 895-931, September.
    4. Celeste M. Black, 2013. "Accounting for Carbon Emission Allowances in the European Union: In Search of Consistency," Accounting in Europe, Taylor & Francis Journals, vol. 10(2), pages 223-239, November.
    5. Mary E. Barth & Wayne R. Landsman & Mark H. Lang, 2008. "International Accounting Standards and Accounting Quality," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 46(3), pages 467-498, June.
    6. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    7. Keck, Steffen & Diecidue, Enrico & Budescu, David V., 2014. "Group decisions under ambiguity: Convergence to neutrality," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 60-71.
    8. Doupnik, Timothy S. & Riccio, Edson Luiz, 2006. "The influence of conservatism and secrecy on the interpretation of verbal probability expressions in the Anglo and Latin cultural areas," The International Journal of Accounting, Elsevier, vol. 41(3), pages 237-261.
    9. Haseeb Ayaz, 2017. "Analysis of Carbon Emission Accounting Practices of Leading Carbon Emitting European Union Companies," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 3(4), pages 463-486, October.
    10. Shana M. Clor‐Proell & Laureen A. Maines, 2014. "The Impact of Recognition Versus Disclosure on Financial Information: A Preparer's Perspective," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 52(3), pages 671-701, June.
    11. Wenqi Han & Andreas Hellmann & Meiting Lu, 2016. "The impact of gender difference on the interpretation of uncertainty expressions," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 24(2), pages 1-1, March.
    12. DeFond, Mark L. & Hung, Mingyi, 2003. "An empirical analysis of analysts' cash flow forecasts," Journal of Accounting and Economics, Elsevier, vol. 35(1), pages 73-100, April.
    13. Alessandro Ghio & Roberto Verona, 2015. "Accounting harmonization in the BRIC countries: A common path?," Accounting Forum, Taylor & Francis Journals, vol. 39(2), pages 121-139, June.
    14. Yingying Han & Parmod Chand & Rajni Mala, 2019. "Impact of ambiguity tolerance and tertiary education on professional judgment," Accounting Forum, Taylor & Francis Journals, vol. 43(4), pages 426-447, October.
    15. Wenqi Han & Andreas Hellmann & Meiting Lu, 2016. "The impact of gender difference on the interpretation of uncertainty expressions," Asian Review of Accounting, Emerald Group Publishing, vol. 24(2), pages 185-201, May.
    16. Wenqi Han & Andreas Hellmann & Meiting Lu, 2016. "The impact of gender difference on the interpretation of uncertainty expressions," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 24(2), pages 1-1, March.
    17. Hoppe, Eva I. & Kusterer, David J., 2011. "Behavioral biases and cognitive reflection," Economics Letters, Elsevier, vol. 110(2), pages 97-100, February.
    18. Ana Isabel Morais, 2020. "Are changes in international accounting standards making them more complex?," Accounting Forum, Taylor & Francis Journals, vol. 44(1), pages 35-63, January.
    19. Paul Hribar & D. Craig Nichols, 2007. "The Use of Unsigned Earnings Quality Measures in Tests of Earnings Management," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 45(5), pages 1017-1053, December.
    20. Doupnik, Timothy S. & Richter, Martin, 2003. "Interpretation of uncertainty expressions: a cross-national study," Accounting, Organizations and Society, Elsevier, vol. 28(1), pages 15-35, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rodrigo de Oliveira Leite & Ricardo Lopes Cardoso, 2020. "The Theory of Cognitive-Conditional Conservatism in Accounting," Mathematics, MDPI, vol. 8(9), pages 1-7, September.
    2. Ricardo Lopes Cardoso & Rodrigo de Oliveira Leite & André Carlos Busanelli de Aquino, 2023. "Probable at First Glance, but Unlikely After Closer Look: The Role of Cognitive Reflection Ability on the Assessment of Probabilistic Expressions," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 58(02), pages 1-31, June.
    3. Alós-Ferrer, Carlos & Hügelschäfer, Sabine, 2016. "Faith in intuition and cognitive reflection," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 61-70.
    4. Corgnet, Brice & DeSantis, Mark & Porter, David, 2020. "The distribution of information and the price efficiency of markets," Journal of Economic Dynamics and Control, Elsevier, vol. 110(C).
    5. Jinrui Pan & Jason Shachat & Sijia Wei, 2020. "Cognitive reflection and economic order quantity inventory management: An experimental investigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 998-1009, September.
    6. Ray Saadaoui Mallek & Mohamed Albaity, 2019. "Individual differences and cognitive reflection across gender and nationality the case of the United Arab Emirates," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1567965-156, January.
    7. Kai Duttle & Keigo Inukai, 2015. "Complexity Aversion: Influences of Cognitive Abilities, Culture and System of Thought," Economics Bulletin, AccessEcon, vol. 35(2), pages 846-855.
    8. Mohammad Noori, 2016. "Cognitive reflection as a predictor of susceptibility to behavioral anomalies," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(1), pages 114-120, January.
    9. Jenny Xinjiao Guan & Emily Shafron & Kangtao Ye & Wenzi Zhuang, 2025. "Is accounting the English language of business? The role of language in IFRS adoption and information loss," Review of Accounting Studies, Springer, vol. 30(3), pages 2963-3020, September.
    10. Antonio Mastrogiorgio & Enrico Petracca, 2014. "Numerals as triggers of System 1 and System 2 in the ‘bat and ball’ problem," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 13(1), pages 135-148, June.
    11. Benjamin Enke & Uri Gneezy & Brian Hall & David Martin & Vadim Nelidov & Theo Offerman & Jeroen van de Ven, 2020. "Cognitive Biases: Mistakes or Missing Stakes?," CESifo Working Paper Series 8168, CESifo.
    12. Joshua Zonca & Giorgio Coricelli & Luca Polonio, 2020. "Gaze patterns disclose the link between cognitive reflection and sophistication in strategic interaction," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(2), pages 230-245, March.
    13. Ji Yong Lee & Rodolfo M. Nayga & Cary Deck & Andreas C. Drichoutis, 2020. "Cognitive Ability and Bidding Behavior in Second Price Auctions: An Experimental Study," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1494-1510, October.
    14. Francesco D’Acunto & Daniel Hoang & Maritta Paloviita & Michael Weber, 2023. "IQ, Expectations, and Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2292-2325.
    15. Zonca, Joshua & Coricelli, Giorgio & Polonio, Luca, 2020. "Gaze patterns disclose the link between cognitive reflection and sophistication in strategic interaction," Judgment and Decision Making, Cambridge University Press, vol. 15(2), pages 230-245, March.
    16. Brañas-Garza, Pablo & Kujal, Praveen & Lenkei, Balint, 2019. "Cognitive reflection test: Whom, how, when," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 82(C).
    17. Houqe, Muhammad Nurul & Monem, Reza M. & Tareq, Mohammad & van Zijl, Tony, 2016. "Secrecy and the impact of mandatory IFRS adoption on earnings quality in Europe," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 476-490.
    18. Benjamin Enke & Uri Gneezy & Brian Hall & David Martin & Vadim Nelidov & Theo Offerman & Jeroen van de Ven, 2023. "Cognitive Biases: Mistakes or Missing Stakes?," The Review of Economics and Statistics, MIT Press, vol. 105(4), pages 818-832, July.
    19. Cueva, Carlos & Iturbe-Ormaetxe, Iñigo & Mata-Pérez, Esther & Ponti, Giovanni & Sartarelli, Marcello & Yu, Haihan & Zhukova, Vita, 2016. "Cognitive (ir)reflection: New experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 81-93.
    20. Lee, Ji Yong & Nayga, Rodolfo M. & Deck, Cary & Drichoutis, Andreas, "undated". "Cognitive Ability and Bidding Behavior in Experimental Auction," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258347, Agricultural and Applied Economics Association.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:accfor:v:49:y:2025:i:2:p:449-471. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/racc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.