Status Quo Bias in Managers’ Accounting Choices Under a Lack of Specific Regulation
DOI:
https://doi.org/10.14392/asaa.2025180308Keywords:
Status quo bias, Behavioral biases, Accounting choices, Value-added taxes, Lack of specific regulationAbstract
Objective: The objective of this research is to understand managers behavior under an environment of lack of specific accounting regulation, analyzing if this scenario can stimulate the presence of status quo bias in managers accounting choices related to an asset with changing conditions.
Research Design: The present study was developed through a combination of case studies and semi-structured interviews with fiscal managers of Brazilian private and public companies that presented ICMS Accumulated Credit in their operations. Data were analyzed through discourse analysis and triangulated with the perceptions of an ex-auditor and a credit analyst regarding managers’ behavior and accounting choices related to the tax asset.
Results: The findings indicate that managers’ accounting decisions regarding ICMS Accumulated Credit are influenced by status quo bias, reflected in inconsistencies between discourse and actions, adherence to prior practices, and reliance on external justifications. The bias was more pronounced in private firms, while investor monitoring in public firms reduced inertia; however, auditors and credit analysts often reinforced rather than mitigated this bias.
Contributions: This paper contributes by showing that status quo bias can influence managers’ decisions in contexts of low enforcement, suggesting that explanations for accounting choices should extend beyond Agency Theory to include insights from Behavioral Finance. The findings also indicate that the Conceptual Framework alone may be insufficient to ensure high-quality financial reporting in the absence of specific standards, highlighting the need to standardize the accounting treatment of value-added taxes to improve information reliability.
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