The impact of cognitive biases on fraudulent behaviour: the Leeson case Online publication date: Tue, 01-Mar-2011
by Asokan Anandarajan, Gary Kleinman
International Journal of Behavioural Accounting and Finance (IJBAF), Vol. 2, No. 1, 2011
Abstract: The forensic accounting literature (e.g., Albrecht et al., 2010) places a great deal of importance on the so-called fraud triangle of motive-means-opportunity. Wolfe and Hermanson (2004) presents a cognitive analysis of factors that may impact the motivation element in the fraud triangle, arguing that situational and other factors may lead individuals to engage in illegal acts without conscious intent to violate the law. We argue that cognitive analyses are important also in understanding individual evaluations of the means and opportunities that confront them. We draw on relevant psychological literature to show how cognitive heuristics can be used to explain why certain managers, in the presence of incentives, rationalise and commit fraud in accounting. We use the 'fraud diamond' (Wolfe and Hermanson, 2004) as the basis of our theoretical development. We use the Leeson/Barings bank's case as an example to demonstrate the application of cognitive biases in the perpetration of fraud.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Behavioural Accounting and Finance (IJBAF):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook