Deck 11: Reactions of Individuals to Financial Reporting: An Examination of Behavioural Research

Question 1

The primary data source for behavioural research is:

A) Observation
B) Archival data
C) Computer simulations
D) All of the given options are correct

Answer 1

A

Question 2

The limitations of behavioural research do not include

A) Many studies present conflicting results
B) Small sample sizes limit the reliability of conclusions
C) Studies are typically conducted in the 'real world', which makes findings difficult to generalise
D) Incomplete theory development

Answer 2

C

Question 3

Behavioural research is concerned with how:

A) Individuals behave when provided with particular items of information
B) Individuals should behave when provided with particular items of information
C) Firms behave when provided with particular items of information
D) Firms should behave when provided with particular items of information

Answer 3

A

Question 4

In relation to current cost information,behavioural research:

A) Does not support inclusion of current cost information, as this information does not appear to alter investment decisions
B) Does not support inclusion of current cost information, as this information does not appear to alter investment returns
C) Supports inclusion of current cost information, as this information appears to alter investment decisions
D) Supports inclusion of current cost information, as this information appears to alter investment returns

Question 5

Which of the following is not a branch of behavioural research?

A) Auditing processes
B) Accounting information processing
C) Accounting standard setting processes
D) All of the above are branches of behavioural research

Question 6

Which of the following statements is true about the Lens model?

A) Cues may be either independent or interrelated
B) Cues may be inter-related but not independent
C) Cues may be independent but not inter-related
D) None of the given options is correct

Question 7

Theories important to behavioural research are drawn from:

A) Behavioural science
B) Behavioural science and psychology
C) Finance and economics
D) Finance and behavioural science

Question 8

An auditor does not revise his or her initial assessment of the quality of a firm's internal controls when contradictory evidence is subsequently obtained.This is an example of the:

A) Anchoring and adjustment heuristic
B) Availability heuristic
C) Representativeness heuristic
D) Assessment heuristic

Question 9

Behavioural research on bankruptcy prediction revealed that:

A) Group predictions outperformed individual predictions
B) Group predictions underperformed individual predictions
C) Bankruptcies were not typically predicted
D) Models which combined the judgments of different subjects underperformed individual models

Question 10

Behavioural research suggests the presentation of financial information in pictorial formats:

A) Makes little difference to decision-making
B) Can improve decision-making
C) Is perceived to improve decision-making, but does not actually improve decision-making
D) None of the given options is correct

Question 11

Behavioural research in accounting has been used to investigate which of the following decision-making processes?

A) The valuation of market shares by individual analysts
B) The lending decisions of loan officers
C) The assessment of bankruptcy by bankers or auditors
D) All of the given options are correct

Question 12

Behavioural research could be useful to accountants,because it could demonstrate the items which should be included in financial reports on the basis that they are:

A) Useful to stakeholders
B) Useful to decision-makers
C) Necessary to discharge management accountability
D) All of the given options are correct

Question 13

'Heuristics' are:

A) Rules
B) Cues
C) Behaviours
D) Decisions

Question 14

Limitations of protocol analysis do not include difficulties with

A) Ensuring that verbal protocols are complete
B) Ensuring that verbal protocols match cognitive processes
C) Developing theory from verbal protocols
D) Coding verbal protocols

Question 15

The Lens model enables researchers to determine the cues that are:

A) Considered important by an individual in creating a certain outcome
B) Actually important in creating a certain outcome
C) Both A and B
D) None of the given options is correct

Question 16

The purpose of behavioural research is:

A) To comprehend individual decision-making
B) To improve individual decision-making
C) To predict individual decision-making
D) All of the given options are correct

Question 17

Which of the following is not a branch of behavioural research?

A) Managerial control systems
B) Stakeholder management systems
C) Accounting information systems design
D) Organisational sociology

Question 18

Some of the issues that have been considered in behavioural research include assessing the impact of:

A) The presentation of cues
B) The perceived rewards of cues
C) The scaling of cues
D) All of the given options are correct

Question 19

According to behavioural research,the most useful accounting information for analysts is:

A) Earnings
B) Sales and earnings
C) Sales, earnings and cashflows
D) Sales, earnings, cashflows and dividends

Question 20

Some of the issues that have been considered in behavioural research do not include

A) How decisions are valued by the market
B) The importance of prior experience to the decision process
C) Whether decisions are stable over time
D) How individuals weight cues to make decisions

Question 21

Which of the following statements is true when comparing behavioural research with capital markets research?

A) Both behavioural research and capital markets research assess the aggregate effect of financial reporting
B) Both behavioural research and capital markets research analyses individual responses to financial reporting
C) Behavioural research analyses individual responses to financial reporting, while capital markets research assesses the aggregate effect of financial reporting
D) None of the given options are correct
E)

Question 22

Which of the following is an issue that has to be considered at the output or decision level of the Lens Model?

A) Characteristics of the person making the judgment
B) Scaling characteristics of individual cues
C) Qualities of the judgment
D) Characteristics of the decision rule

Question 23

Which of the following is an issue that has to be considered at the input level of the Lens Model?

A) Characteristics of the person making the judgment
B) Scaling characteristics of individual cues
C) Qualities of the judgment
D) Characteristics of the decision rule

Question 24

According to Wood and Ross (2006),which of the following environmental and social controls is the most influential factor in affecting managers' capital investment decisions with respect to investing in less-polluting plant and equipment?

A) Mandatory disclosure required by law and accounting standards
B) Regulatory costs, such as direct payments on pollutant emissions and clean-up costs
C) Stakeholder opinion. That is, how the investment will be approved by various stakeholder groups
D) None of the given options is correct