Behavioral Forensics in Accounting: Understanding the Psychology of Financial Fraudsters

Muhammed Zakir Hossain
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Muhammed Zakir Hossain: Associate Professor, Department of Business Studies, State University of Bangladesh, Bangladesh

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Abstract: This study examines the role of behavioral forensics in accounting and evaluates how psychological insight can strengthen the detection and prevention of financial fraud. While conventional forensic accounting remains highly useful for tracing transaction irregularities, reconstructing events, and documenting monetary loss, it often identifies fraud after material damage has already occurred. Behavioral forensics extends this toolkit by examining the motives, personality characteristics, rationalization patterns, and interpersonal behaviors that accompany fraudulent conduct. The study draws on survey responses from 100 professionals engaged in forensic accounting, auditing, fraud examination, and financial crime investigation. The findings show that practitioners repeatedly associate financial fraudsters with Machiavellianism, narcissism, psychopathy, rationalization, and elevated risk-taking. Respondents also indicate that behavioral forensic methods, particularly psychological profiling, deception-oriented interviewing, and the interpretation of behavioral cues, are more effective than traditional auditing when used in isolation, although the strongest results emerge when behavioral and traditional methods are integrated. At the same time, the study identifies practical impediments to implementation, including shortages of trained personnel, organizational resistance, ethical concerns, and the difficulty of translating behavioral indicators into standardized measures. The paper argues that fraud must be understood as both an accounting problem and a human-behavior problem. It therefore recommends a hybrid fraud risk model in which forensic accounting, psychology, and technology operate together through training, governance reform, and selective use of AI-enabled monitoring. By preserving the central accounting focus while expanding the lens to include human motives and conduct, behavioral forensics offers a more preventive, analytically rich, and institutionally useful approach to financial fraud detection.

Keywords: AI in Fraud Detection; Psychological Traits; Fraud Triangle; Forensic Accounting; Financial Fraud; Behavioral Forensics (search for similar items in EconPapers)
Date: 2026-03-30
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Published in European Journal of Management, Economics and Business, 2026, 3 (2), pp.265-281. ⟨10.59324/ejmeb.2026.3(2).19⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05736626

DOI: 10.59324/ejmeb.2026.3(2).19

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