Belief functions in accounting behavioral research

Abstract

Behavioral accounting research deals with a complex set of phenomenon including the broad domain of human decision making under uncertainty. Two aspects of decision making of particular relevance to accounting and auditing research are two constructs that are inexorably interrelated: uncertainty and information (evidence). This paper introduces a theoretical perspective that enriches the knowledge-set that may be used in behavioral accounting research when confronting decision contexts that involve uncertainly. The main body of the paper is an introduction to belief functions. The introduction includes a discussion of the fundamental constructs and then illustrates the use of belief functions in two audit settings: traditional financial statement audit planning and the evaluation of evidence in a cascaded-inference setting involving the ebaluation of internal accounting control. The paper concludes with a brief exploration of some of the research issues and opportunities that are related to the potential use of belief functions in behavioral accounting research.