An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Kendall O. Bowlin
University of Texas at Austin

Jeffrey Hales
University of Texas at Austin

Steven J. Kachelmeier
University of Texas at Austin

Abstract: We use a simple bi-matrix experimental game to examine the strategic effect of experience as an auditor on subsequent employment in a reporting capacity for an audited entity. Prior research on this topic has generally focused on auditor independence issues when an auditor subsequently accepts employment with a former client. In contrast, we focus on the more general effect of strategic experience as an auditor even when independence issues are absent, such as when an auditor accepts employment with another firm's client. We find that reporter participants who have former experience in the auditor role (termed “auditor-reporters”) are more sensitive to larger penalties for misreporting than are reporters who have the same amount of total experience, but exclusively in the reporter role (“professional reporters”). This finding is especially acute for auditor-reporters who tested relatively often in their former experience as auditors.

Back to Session Listing

AAA Home Page