Behavioural accounting: are accounting terms lost in translation?

Abstract

This thesis will start from accounting theory, and various approaches for its elaboration will be presented, focusing on the behavioural accounting one. In the past, there was the idea that individuals making decisions always act in a rational way, but nowadays this belief’s credibility has diminished, starting to be substituted by studies focusing on how the actions and decisions can be influenced, by adopting the behavioural accounting approach. Then, given that financial reporting is about communicating accounting information to users to enable them to make decisions, a lack of consideration of how that information influences their behaviour is unforgivable. Here, the focus will shift on the adequacy of disclosure in which the role of translation is extremely important: are accounting terms lost in translation because of behavioural aspects, such as culture and language, affecting their interpretation and application? The goal is to improve the reliability and comparability across the world in financial reporting, addressing the limits of IFRS' translation and identifying whether they are equally and consistently understood around the world. An in-depth analysis will be presented about the link between accounting, language, culture and thought, with some examples of major misunderstandings, such as Impairment and TFV. An examination of the distances in terms used for financial reports in various languages will be investigated, about how certain terms differ in the European Fourth Directive on Company Law and in the International Standards framework.