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Title: Two minds of credit professionals: accrual vs. cash accounting information

Authors: Harri Seppänen; Timo Teinilä

Addresses: Aalto University, Ekonominaukio 1, 02150 Espoo, Finland; University of South Africa (UNISA), Preller Street, Muckleneuk, Pretoria, 0002, South Africa ' Asian Development Bank, 6 ADB Avenue, 1550 Ortigas, Metro Manila, Philippines; University of Turku, 20014 Turun yliopisto, Turku, Finland

Abstract: To explore in what ways and what elements of financial statement information is important for credit practitioners, we employ a survey method to obtain new evidence. We ask if there is evidence on the existence of two different types of views to accounting information, namely accrual accounting and cash accounting emphasis. The two views come out robustly throughout our analysis, and they are consistently linked both to credit professional's experience, and task complexity. We infer our evidence to be consistent with the explanations for co-existence of differential information preferences advanced in behavioural accounting literature related to individuals' cognitive constraints in use of accounting information. We discuss the implications of our results for credit professionals, accounting standard setters and researchers.

Keywords: financial statements; credit professionals; cash accounting; accrual accounting; accounting information; behavioural; rational inattention; limited attention; information preferences; experience; task complexity; survey.

DOI: 10.1504/IJMFA.2022.10045162

International Journal of Managerial and Financial Accounting, 2022 Vol.14 No.1, pp.56 - 83

Accepted: 20 Aug 2021
Published online: 17 Feb 2022 *

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