Most entrepreneurs are a financial black hole because they’ve never started a company before or run one. So, you don’t have any history on them to analyze. Even when you do it will be so current you can’t even trust the figures because they are totally new. This situation is pretty similar to where investors in WeWork just found themselves.
You don’t have to go far to read something about a failed Merges and Acquisitions (M&A) transaction. One that comes to mind is the Sears-Kmart transaction which is cratering as we speak. It’s been called “the greatest destruction of retail value in history.” Remember the mega-merger between Kraft and Heinz? The New York Times recently called it a mega-mess. Oh, and that includes its accounting – I will talk more about that below.
What are behavioral forensics? Why would accountants and financial analysts and planners even need to consider behavior. Behavioral economics and behavioral finance tackle the issue of how people make economic and financial decisions if they are not completely rational.
The idea that your analyses are not impacted by your behavior is belied by a new field of research called behavioral accounting. This focuses on the impacts of behavior on accounting frameworks and their data products.
In this article, Niels van Hove argues that while effective integrated FP&A can thrive in the right company culture, the FP&A process itself can influence and shape that culture. He calls for FP&A leaders to articulate goals that include clear expectations on behaviors. Doing so will not only improve effectiveness but also enable FP&A to play an active role in improving employee attitudes and satisfaction.