We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Behavioral Accounting?

Daniel Liden
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Behavioral accounting is a method of money recording and management that attempts to assign value to a company based on the values and behaviors of those in charge. It is sometimes referred to as "human resource accounting" because it is based in human behaviors and decisions as opposed to other accounting methods, which are typically based only on the expenses and profits associated with running a business. It is, especially for large businesses, impossible to make judgments about the values and behaviors of each individual, so behavioral accounting is generally based on the behavior of the leaders and primary decision makers of a company. The goal of this accounting method is to represent the value of the human aspects of a company to stakeholders, potential investors, and other interested parties.

The importance of behavioral accounting can be most simply described by considering two companies that are identical in every respect in terms of expenses, profits, and all other non-human variables. An individual trying to decide which company to invest in may have a difficult time doing so because, based on conventional accounting methods, both companies look the same on paper. The use of behavioral accounting methods, however, may indicate to the potential investor that one company's leaders tend to demonstrate better decision making and hold better values than the other company. In some cases, this accounting method can reveal a business's value in a way that goes far beyond the cost and expense numbers on paper.

Transparency is an important part of behavioral accounting, as it prevents business decision makers from hiding behind cost reports and numbers on paper. While behavioral accounting can reveal that a company's success occurred because of the excellent and well-informed decisions of the key decision makers, it may reveal instead that a company's success came about in spite of poor decision making. This transparency gives stakeholders and investors a much clearer view and understanding of the company they are choosing to support.

Behavioral accounting is a common area of study in business research because of the importance and difficulty associated with assigning value to the human aspects of a company. Such research is often multidisciplinary in nature, as sociology, psychology, and mathematical methods in accounting are often important and relevant. Researchers in behavioral accounting may, for instance, try to develop effective and useful methods to measure the value of a businessman to a business over time by taking into consideration each major decision he makes.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Daniel Liden
By Daniel Liden
Daniel Liden, a talented writer with a passion for cutting-edge topics and data analysis, brings a unique perspective to his work. With a diverse academic background, he crafts compelling content on complex subjects, showcasing his ability to effectively communicate intricate ideas. He is skilled at understanding and connecting with target audiences, making him a valuable contributor.
Discussion Comments
Daniel Liden
Daniel Liden
Daniel Liden, a talented writer with a passion for cutting-edge topics and data analysis, brings a unique perspective to...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.