Abstract
Purpose – The purpose of this paper is to introduce new economic psychology theories that can explain fraud, misconduct and non-compliance that may arise from the implementation and enforcement of accounting standards codification (ASC) 805/350, international financial reporting standards (IFRS) 3R and IAS-38. Design/methodology/approach – The approach is entirely theoretical. The paper analyzes existing theories about real options and enforcement of regulations/statutes, and introduces new psychological biases that can arise. Findings – The real options approach suggested for handling the enforcement of goodwill/intangibles regulations is not effective. Research limitations/implications – The research is limited to international accounting standards board (IASB)/IFRS and financial accounting standards board (FASB) accounting standards. Originality/value – The critiques and theories developed in the paper can be used in the analysis of selection of disputes for litigation, anti-corruption programs and regulation of transactions that are susceptible to fraud.
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