Guest editorial: Behavioral accounting and finance

In recent decades, behavioral accounting and finance have emerged as vital areas of inquiry, reshaping how we understand decision-making in firms, financial markets and corporate governance. Traditional theories grounded in rational expectations and efficient markets often fail to capture the complexities of real-world behavior. Instead, evidence from psychology, behavioral economics and accounting research increasingly demonstrates that biases, heuristics and bounded rationality exert profound effects on individual, managerial and market-level outcomes. This special issue of the International Journal of Accounting and Information Management highlights innovative research that demonstrates how behavioral factors shape decision-making, with implications for governance, market regulation and economic stability.The motivation for this special issue arises from both academic developments and pressing real-world crises that highlight the costs of behavioral distortions. Recent bubbles in crypto assets and meme stocks demonstrate how shifts in investor sentiment and risk perceptions can inflate valuations and magnify volatility. Likewise, persistent behavioral biases in portfolio decisions – such as overconfidence, herding and miscalibrated expectations – continue to undermine returns even for sophisticated investors. The lack of financial literacy has had especially far-reaching consequences: it has fueled the US student debt crisis by leaving borrowers ill-prepared to evaluate repayment obligations, contributed to poor retirement planning skills that jeopardize long-term financial security, and widened income inequality by limiting opportunities for wealth accumulation and informed financial participation. Parallel weaknesses in governance have amplified systemic risks, as seen in Wirecard’s fraud and Boeing’s 737 Max crisis, where oversight failures magnified firm-level misconduct. At the executive level, excessive risk-taking by CEOs has directly destroyed firm value – illustrated most starkly by the collapse of Archegos Capital, which erased billions in market value, and the downfall of WeWork, where aggressive expansion and misaligned incentives drove the company to the brink of bankruptcy. Collectively, these examples underscore how biases, weak oversight and limited financial literacy not only destabilize firms and markets but also undermine household financial well-being and broader economic stability. The rapid growth of scholarship in behavioral accounting and finance, and its rising scholarly influence, attests to the urgency of advancing this field to better understand and mitigate such crises.The papers in this issue highlight how behavioral biases manifest across diverse contexts and are shaped by cultural, demographic and technological factors. Several studies extend the traditional focus on investor psychology into new domains. For example, Özçelik and Kurt (2026) show that investors’ perceptions of fraud in crypto assets heighten risk aversion and reduce investment intentions, while Epelbaum (2026) demonstrates that risk disclosures can temper the fear of missing out in crypto markets by raising risk awareness. Bouteska et al. (2026) construct sentiment indices for the US and Chinese markets, showing that business confidence is a superior proxy for investor sentiment and that optimism and pessimism influence volatility differently across countries. Together, these studies emphasize how perceptions and emotions drive behavior in speculative environments.A related strand examines how demographic and cultural factors condition behavioral responses. Hans et al. (2026) find that regret aversion, gambler’s fallacy and greed shaped equity investment decisions during the COVID-19 crisis, while Raj (2026) shows that herd behavior and overconfidence remain pervasive among Indian investors, with women particularly prone to herding tendencies. Similarly, Sadeeq and Butt (2026) reveal that heuristic-driven biases such as representativeness and anchoring strongly influence Indian retail investors, and importantly, these biases persist even among the financially literate. These findings underline that cognitive distortions remain robust despite knowledge, crisis or demographic differences.Other contributions explore how emerging technologies and programs reshape decision-making. Maheshwari and Samantaray (2026) demonstrate that Gen Z investors are susceptible to biases such as herding and FOMO, but artificial intelligence (AI)-enabled digital advisory services can partially mitigate these tendencies. Complementing this, Akhtar et al. (2026) show that personality traits, financial knowledge and AI jointly encourage women to adopt fintech payment services, with important implications for financial inclusion. Mitra and De (2026) highlight how financial literacy programs can improve access to financial services by reducing biases, reinforcing the importance of education and disclosure in shaping financial inclusion. Taken together, these studies suggest that while technology does not eliminate behavioral biases, it can alter their impact and open new avenues for participation in financial markets.The issue also expands the boundaries of behavioral finance into governance and corporate decision-making. Patterson et al. (2026) show that CEOs with daughters are significantly more likely to promote gender diversity on boards, reflecting how personal experiences shape governance choices. Yusuf (2026) adds to this literature by demonstrating that CEO social capital moderates the relationship between compensation and strategic risk-taking, suggesting that networks and personal attributes strongly influence corporate outcomes.Behavioral research in accounting and finance is not merely an academic exercise as it has tangible societal relevance. As firms, auditors, regulators and investors confront increasingly complex environments shaped by globalization, technological improvements and shifting societal expectations, the costs of ignoring behavioral realities are high. Misjudgments rooted in bias, weak governance or limited financial literacy can destabilize markets, undermine corporate accountability and widen inequality. By examining the drivers of poor decision-making and identifying mechanisms that promote more informed and responsible choices, this special issue contributes to building more resilient financial system. The insights offered here also align with broader global priorities, including responsible management, inclusive growth and sustainable development.I am confident that the contributions to this issue will stimulate future research on unexplored questions and inspire interdisciplinary collaborations across accounting, finance, psychology and data science. I hope this collection serves as both a foundation and a catalyst for continued inquiry into how behavioral factors shape financial systems in ways that are consequential for organizations, markets and society at large.Finally, the author extends his gratitude to the authors who contributed their work, the reviewers who provided thoughtful feedback, and Dr Han Donker (coeditor) and the editorial team of the International Journal of Accounting and Information Management for supporting the realization of this special issue.