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Open AccessArticle

The Theory of Cognitive-Conditional Conservatism in Accounting

COPPEAD Graduate School of Business, The Federal University of Rio de Janeiro, Rua Pascoal Lemme 355 Office 423, Rio de Janeiro 21941-902, Brazil
Brazilian School of Public and Business Administration, Getulio Vargas Foundation, Rua Jornalista Orlando Dantas, 30, sala 206, Rio de Janeiro 22231-010, Brazil
Author to whom correspondence should be addressed.
Mathematics 2020, 8(9), 1552;
Received: 25 August 2020 / Revised: 6 September 2020 / Accepted: 7 September 2020 / Published: 10 September 2020
(This article belongs to the Special Issue Mathematical Modeling of Socio-Economic Systems)
Literature from multiple fields in psychology and economics have identified that impulsive individuals are more prone to riskier behavior and are less conservative. Accounting literature has studied conservatism for many years, and demonstrated that there are two roots of conservatism, one unconditional and another conditional to news available at decision-making. However, there is no bridge linking both. Using an analytical model, we show that the conservatism level of an accountant is lower for impulsive individuals because of their reduced focus on future consequences of their decisions, which is coupled with an increased focus on present consequences. Hence, we put forward a theory of “cognitive-conditional conservatism”, that is, a third root of conservatism. Additionally, we also prove the asymmetry property of this behavior. View Full-Text
Keywords: accounting conservatism; cognitive reflection; cognitive-conditional conservatism accounting conservatism; cognitive reflection; cognitive-conditional conservatism
MDPI and ACS Style

Leite, R.d.O.; Cardoso, R.L. The Theory of Cognitive-Conditional Conservatism in Accounting. Mathematics 2020, 8, 1552.

AMA Style

Leite RdO, Cardoso RL. The Theory of Cognitive-Conditional Conservatism in Accounting. Mathematics. 2020; 8(9):1552.

Chicago/Turabian Style

Leite, Rodrigo d.O.; Cardoso, Ricardo L. 2020. "The Theory of Cognitive-Conditional Conservatism in Accounting" Mathematics 8, no. 9: 1552.

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