Behavioral accounting

Behavioral accounting includes the value of the work force when determining the value of a company. Thus, when employees are highly experienced and the management team is skilled at guiding the organization, these factors will increase the value of the firm. When the reverse is the case, the human element will reduce the value of an entity.

The investors and other stakeholders in a business should take behavioral accounting into consideration when evaluating a business, since it can have a profound impact on the long-term profitability and competitiveness of the organization.