International Journal of Accounting and Taxation

The Influence of the Culture on Managers’ Capital-Budget Decisions
Dr. Lijuan Zhao

Abstract
Some researches in behavior accounting focus on the emotional affect and examine the influence of the emotional affect especially negative affect on capital budget decision-making. Kida, Moreno and Smith (2001) find that these affective reactions especially negative affect will influence managers' capital-budgeting decisions; managers will reject alternative that elicit negative affect even though it has higher economic values. Kida and Smith (2002) provide evidence that affective reaction will influence managers’ risk-taking tendency in capital-budget decisions. However, these two studies fail to consider the role of different level individualism when they investigate the influence of affect on decision-making. Therefore, this study extends Kida et. al (2001) to investigate the role of culture in the context of affect and decision-making. This study finds that managers who are from low-individualism cultures are less likely to reject the alternatives that elicit negative affect but having high economic values than those managers who are from high-level individualist cultures.

Full Text: PDF     DOI: 10.15640/ijat.v2n4a3