The Impact of Mental Accounting on Administrative Decision-Making: An Analytical Survey Study of the Opinions of a Group of Specialized Academics and Managers (Decision-Takers) in a Sample of Industrial Companies Operating in the Kurdistan Region – Iraq

Abstract

This study aims to demonstrate the impact of mental accounting on the preparers of management accounting information (decision makers) and consequently on guiding the behavior of decision takers in their evaluation of this information and their taking of administrative decisions that affect the future of the economic unit and its fate towards survival and growth. To achieve this goal, the researcher tried to review the existing studies on behavioral sciences and mainly studies on mental accounting in various fields, not just the field of accounting and management accounting, because behavioral studies in the field of accounting are few and almost non-existent in the field of management accounting. To achieve the objectives of the study, the opinions of decision-makers and specialized academics in the Kurdistan Region/Iraq were surveyed on the subject of the study. A group of decision-makers and specialized academics (university professors) were selected, numbering (112) individuals, and questionnaire forms were distributed to them, and then the results were analyzed using the Statistical Package for the Social Sciences (SPSS) program. The study concluded that both the preparers of accounting information (management accountants) and decision takers are exposed to what is called mental accounting practices in the processes of preparing and presenting accounting information and evaluating alternatives, and consequently when taking administrative decisions in a way that leads to biased and irrational decisions. Accordingly, the study recommended spreading awareness about mental accounting practices and behavioral biases among those preparing accounting information and decision takers in economic units because this will help them notice systematic errors resulting from behavioral factors and thus try to reduce their negative effects.