Accounting Behavior and Organizations Sections Publications
Behavioral Research in Accounting (BRIA)
2008
Volume 20(1)--Forthcoming
A publication of the Accounting, Behavior and Organizations Section of the AAA
Table of Contents
- The Effect of a Justification Memo and Hypothesis Set Quality on the Review Process
Stephen K. Asare and Arnold Wright
- DCF Techniques and Non-Financial Measures in Capital Budgeting: A Contingency Approach Analysis
Shimin Chen
The Impact of Nonaudit Service Fee Levels on Investors’ Perception of Auditor Independence
Shawn M. Davis and Dana Hollie
- Accounting Firm Culture and Governance: A Research Synthesis
J. Gregory Jenkins, Donald R. Deis, Jean C. Bedard, and Mary B. Curtis
- An Empirical Examination of a Three-Component Model of Professional Commitment Among Public Accountants
David Smith and Matthew Hall
- Disclosure versus Recognition of Stock Option Compensation: Effect on the Credit Decisions of Loan Officers
Chantal Viger, Réjean Belzile, and Asokan Anandarajan
- Accounting and Machiavellianism
Robin L. Wakefield
- The Effects of Decision Aid Design on Information Search Strategies and Confirmation Bias of Tax Professionals
Patrick Wheeler and Vairam Arunachalam
Behavioral Research in Accounting (BRIA)
2007
Volume 19
A publication of the Accounting, Behavior and Organizations Section of the AAA
Table of Contents
Stephen K. Asare, Christine M. Haynes, and J. Gregory Jenkins
Donna M. Booker, Andrea Drake, and Dan L. Heitger
Laurie Burney and Sally Widener
Andrea Drake, Jeffrey Wong, and Stephen Salter
Donald B. Fedor and Robert J. Ramsay
Ethical reasoning and equitable relief*
Gary Fleischman, Sean Valentine, and Don W. Finn
Dan. L. Heitger
The effect of audit inquiries on the ability to detect financial misrepresentations*
Chih-Chen Lee and Robert B. Welker
Linda M. Parsons
Robert Pinsker
Jacob M. Rose
Culture, implicit theories, and the attribution of morality*
Bernard Wong-On-Wing and Gladie Lui
William F. Wright
* Accepted by S. Kaplan
The Effects of Client and Preparer Risk Factors
on Workpaper Review Effectiveness
Stephen K. Asare
University of Florida
Christine M. Haynes
University of West Georgia
J. Gregory Jenkins
Virginia Polytechnic Institute and State University
ABSTRACT: Both client risk and workpaper preparer risk are important contextual factors that reviewers must manage. In this study, we experimentally investigate how combined client risk and preparer risk impact workpaper review effort and accuracy. We found that reviewers allocated more effort when reviewing workpapers of a high risk client, relative to a low risk client, but preparer risk did not drive effort. With respect to review accuracy, we found that in a high client risk environment, reviewers were more accurate when preparer risk was high than when preparer risk was low. However, when client risk was low, review accuracy was invariant to preparer risk. These results suggest that although preparer risk is not a driver of review effort, it, nevertheless can affect accuracy when client risk is high. Together, the results suggest that review effort does not appear to be the sole determinant of review accuracy.
New Product Development: How Cost Information Precision Affects Designer
Focus and Behavior in a Multiple Objective Setting
Donna M. Booker
Assistant Professor of Accounting
University of Cincinnati
Andrea Drake
Assistant Professor of Accounting
University of Cincinnati
Dan L. Heitger*
Assistant Professor of Accounting
Miami University
ABSTRACT: The development of new products that satisfy customer needs in a cost effective manner is key to survival for many organizations. The role that cost information plays in new product development (NPD), such as its effect on designers’ focus and crucial NPD performance measures, is unclear. This experimental study extends existing accounting NPD research by investigating the effect of two levels of cost information precision (specific versus relative) and new products (radical versus incremental) on designers’ focus and two common NPD performance measures: product cost and product features. The results indicate that compared to relative cost information, specific cost information increases designers’ focus on cost minimization for incremental but not radical products. However, providing designers with specific cost information results in more cost effective designs for both types of products. In addition, contrary to expectations, more cost effective designs do not come at the expense of reduced product features. The results show that the role played by cost information in NPD is more complex than has been suggested in prior literature.
Laurie Burney
Mississippi State University
lmcwhorter@cobilan.msstate.edu
Sally K. Widener
Rice University
ABSTRACT: This study explores managerial behavioral responses associated with the extent to which a firm’s performance measurement system is linked to its strategy (SPMS). We hypothesize that an SPMS is positively associated with higher levels of job-relevant information (JRI) and lower levels of role stressors, which are then associated with higher levels of managerial performance. Using survey data from over 700 respondents, we find that an SPMS positively affects performance through its relations with JRI and role ambiguity (RA). Managers perceive that they have higher levels of JRI and lower levels of both role conflict (RC) and RA when they have an SPMS closely linked to strategy. In turn, performance is higher when managers perceive that their RA is lower. Additionally, we find that the link to the evaluative process, complexity, and managerial experience moderate the relations between an SPMS and JRI, RA, and RC.
Andrea Drake
University of Cincinnati
Andrea.Drake@uc.edu
Jeffrey Wong
University of Nevada at Reno
wongj@unr.edu
Stephen Salter
University of Cincinnati
saltersb@ucmail.uc.edu
ABSTRACT: Motivated employees play a key role in organization success and past research indicates a positive association between perceptions of empowerment and motivation. A prominent model put forth by Spreitzer (1995) suggests that two major components of control systems will positively affect employee feelings of empowerment-- performance feedback and performance-based reward systems. This experimental study contributes to the behavioral accounting literature by examining how specific types of performance feedback and performance-based rewards affect three psychological dimensions of empowerment. Also, we use a relatively simple context to investigate whether predictions validated on surveys of managers also hold for lower-level workers. Our results suggest that feedback and rewards affect the dimensions of empowerment differently for lower level workers than they do for managers. Namely, performance feedback was positively associated with only one dimension and performance-based rewards had negative effects on two out of the three dimensions. In addition, overall motivation was not significantly associated with two of the three empowerment dimensions. Implications of this study are that techniques that work to increase manager perceptions of empowerment may not work at lower organizational levels and, even if successful, the related increase in employee motivation may not be significant.
Effects of Supervisor Power on Preparers’ Responses to Audit Review: A Field Study
Donald B. Fedor
Georgia Institute of Technology
donald.fedor@mgt.gatech.edu
Robert J. Ramsay
University of Kentucky
rjrams2@pop.uky.edu
ABSTRACT: This study investigates the role of audit review as feedback to workpaper preparers. Specifically, we examine whether review affects preparers’ attempts to improve their performance, manage their reviewers’ impressions of their work, and seek additional feedback from their reviewers. We also examine the effects of preparers’ perceptions of their reviewers’ power. Power has previously been shown to be a critical construct affecting feedback. Our findings suggest that perceptions of reviewer power affect preparers’ responses to review. Specifically, referent power appears to have the most positive effect on preparer's responses, while perceptions of coercive power have detrimental effects.
ETHICAL REASONING AND EQUITABLE RELIEF
Gary Fleischman
University of Wyoming
Sean Valentine
University of Wyoming
Don W. Finn
University of Arkansas
ABSTRACT: Professional manager perceptions were investigated in this study using a survey containing two equitable relief situational vignettes to empirically investigate two of the four steps from Rest’s (1986) ethical reasoning process. Business societal perceptions of the equitable relief subset of the innocent spouse rules were also investigated, focusing on the knowledge of evasion and abuse factors. The results indicated that the ethical reasoning process was significantly related to ethical decision making and Rest’s model. Furthermore, decision-makers were more likely to judge that relief be granted in an equitable relief scenario involving abuse than to one not involving abuse. The knowledge of evasion factor contained in both scenarios appeared to indirectly influence respondents’ judgments to deny equitable relief, while the presence of emotional abuse strengthened relief judgments. Finally, the study presents a general framework involving the interrelationship of Congressional intent with societal perceptions regarding subjective equitable relief tax law provisions that are associated within a societal context.
Estimating Activity Costs: How the Provision of Accurate Historical Activity Data
From a Biased Cost System Can Improve Individuals’ Cost Estimation Accuracy
Dan L. Heitger
Miami University
ABSTRACT: An integral component of effective cost control and performance evaluation is the ability to accurately estimate relationships between activities and overhead costs (i.e., activity costs). Individuals using a single cost pool system often have to rely on memory of historical activity data when estimating activity costs. If individuals’ recall of data is representative of the historical data, then reliance on memory should not be detrimental to cost estimation accuracy. However, individuals often possess incorrect initial beliefs about activity costs. These incorrect beliefs are expected to serve as an anchor from which individuals make insufficient adjustments when estimating activity costs based on memory of historical activity data. Multiple cost pool systems frequently provide biased standard rates; however, such systems also provide accurate historical activity data when individuals estimate costs. I extend prior accounting research by experimentally examining whether a multiple cost pool system’s provision of accurate historical activity data improves activity cost estimation for individuals with incorrect cost beliefs even when the cost system also provides biased standard rates. The main contribution of the study is its finding that the multiple cost pool system’s provision of historical activity data improves individuals’ adjustments from their incorrect initial cost beliefs when estimating activity costs, thereby increasing their estimation accuracy. The results suggest that this improved adjustment from incorrect initial cost beliefs occurs because the provision of historical activity data improves individuals’ recognition of how wrong their initial cost beliefs were in reality. This result is achieved even though the cost system provides biased standard rates. The ability of flawed cost systems to improve individuals’ activity cost estimation in other such ways has received little research attention and is important because of its potential for improving managerial decision making.
The Effect of Audit Inquiries no the Ability to
Detect Financial Misrepresentations
Chih-Chen Lee
Northern Illinois University
Robert B. Welker
Southern Illinois University – Carbondale
ABSTRACT: Recent professional promulgations recommend the use of audit inquiry for fraud detection. One benefit of audit inquiries is that they may induce interviewees to act in ways that facilitate the discovery of intentional financial misrepresentations (deception). We conducted two experiments to assess the ability of prospective accountants (upper-level accounting majors) to detect intentional financial misrepresentations in audit inquiries. These accounting majors served as proxies for entry-level accountants. Our results indicate that participants have poor deception detection ability in evaluating a response to an inquiry, even when they receive deception detection training prior to the inquiry and when repeat questions are added to the inquiry to heighten the level of stress with which interviewees must cope. But our results also suggest that the inquiry process may change the way participants view interviewees. Participants were more skeptical of verbal financial representations (e.g., valuation, existence) after they observed an inquiry regarding the representations. These results suggest that an inquiry does not significantly increase the ability of entry-level accountants to detect deception accurately, but it may benefit fraud detection by inducing a skeptical mindset for their evaluations of financial representations.
The Impact of Financial Information and Voluntary Disclosures on
Contributions to Not-for-Profit Organizations
Linda M. Parsons
George Mason University
Lparsons@gmu.edu
ABSTRACT: This study uses a field-based experiment combined with a follow-up laboratory experiment to investigate whether accounting information reduces perceived uncertainty about nonprofit operations. Potential donors were sent, via a direct mail campaign, fundraising appeals containing varying amounts of financial and nonfinancial information in order to determine whether individual donors are more likely to contribute when accounting information or voluntary disclosures are provided. Participants in a lab experiment were asked to assess the usefulness of the different versions of the fundraising appeals. A logistic regression provides evidence that some donors who have previously donated use financial accounting information when making a donation decision. The results are inconclusive regarding whether donors use nonfinancial service efforts and accomplishments disclosures to determine whether and how much to give, but participants in the lab experiment judged the nonfinancial disclosures to be useful for making a giving decision.
Long Series of Information and Non-Professional Investors’ Belief Revision
Robert Pinsker
Old Dominion University
rpinsker@odu.edu
ABSTRACT: This paper reports the results of an experiment designed to examine the effect of disclosure pattern (sequential versus simultaneous) and direction of information (positive/negative versus negative/positive)) on non-professional investors’ belief revisions. An important feature of the experiment is that long series of information are used. Prior research has largely examined individuals’ belief revisions using short series of information. Results indicate that individuals revise beliefs to a larger extent when the disclosure pattern is sequential rather than simultaneous. The findings extend the prior belief revision literature by providing evidence that results hold using long series of information: the current experiment uses 20 pieces of information, whereas most accounting studies only use four pieces of information. Results also contribute to the extant financial accounting literature on non-professional investors, which is particularly relevant given the larger number of inexperienced investors entering the marketplace and recent legislation that requires more detailed firm disclosures (e.g., the Sarbanes-Oxley Act of 2002).
Attention to Evidence of Aggressive Financial Reporting and Intentional Misstatement Judgments: Effects of Experience and Trust
Jacob M. Rose
Southern Illinois University – Carbondale
Abstract: This study extends prior research by examining the effects of dispositional trust, induced skepticism, and fraud-specific audit experience on attention to aggressive financial reporting practices and judgments of potential misstatement. In an experimental analysis using 125 practicing auditors, this study finds that auditors who are less trusting of others attend more to evidence of aggressive reporting than do more trusting auditors and higher levels of induced skepticism increase attention to aggressive reporting. Further, auditors who pay more attention to evidence of aggressive reporting are more likely to believe that intentional misstatement occurred. General audit experience was not a predictor of auditor’s attention to aggressive reporting or auditor’s judgments about intentional misstatements. Auditors with more fraud-specific experience, however, were more likely than auditors with less fraud-specific experience to believe that intentional misstatement had occurred when evidence of aggressive reporting exists.
Culture, Implicit Theories and the Attribution of Morality
Bernard Wong-On-Wing
Washington State University
Gladie Lui
Chinese University of Hong Kong
ABSTRACT: Recent research (Choi and Nisbett 1998, 2000; Choi et al. 1999; Ji et al. 2000; Nisbett et al. 2001) has repeatedly shown that compared to Westerners, East Asians pay greater attention to situational factors and endorse a more holistic theory of causality. Based on this robust finding, the present study examined the extent to which Americans and Chinese differ in their causal judgment about, and their reaction to observed fraudulent behavior. The results show that compared to Americans, Chinese were more sensitive to situational factors. They were less likely to attribute fraudulent behavior to individual dispositions, and less likely to agree to punitive measures that are directed at the target person. Implications for both practice and research are discussed.
Academic Instruction as a Determinant of Judgment Performance
William F. Wright
University of Illinois
ABSTRACT: Auditors evaluate the collectibility of commercial loans when they conduct financial audits of financial institutions. Task-specific academic instruction and practice provide for acquisition of relevant credit analysis knowledge—but the relative benefits of academic instruction and practice versus training and practical experience remain unclear (e.g., Bonner and Walker 1994; Hammond 1996). First, loan judgments made by second-year graduate business students completing an elective course in credit analysis are compared with judgments made by audit seniors with similar business experience but without any credit analysis training or experience. The graduate business students’ judgments are significantly more accurate and less biased, with more consensus, given the criterion of the mean judgment of twelve highly experienced financial institution audit partners. Second, as a test of the benefits of academic instruction and practice versus CPA firm training and practical experience, the judgments of the graduate business students are compared with judgments provided by experienced auditors (seniors and managers): similar levels of judgment performance are indicated. Models of the loan judgments of the different groups of participants based on attributes of the borrower explain why the graduate business students performed especially well.
Behavioral Research in Accounting (BRIA)
2006
Volume 18
A publication of the Accounting, Behavior and Organizations Section of the AAA
Table of Contents
Duane M. Brandon and Jennifer M. Mueller
Stan Davis, Todd DeZoort, and Lori S. Kopp
Michael Eames, Steven M. Glover, and Jane Jollineau Kennedy
Michael Favere-Marchesi
Constance M. Lehmann and Carolyn Strand Norman
Laureen A. Maines, Gerald L. Solamon, and Geoffrey B. Sprinkle*
Dawn W. Massey and Linda Thorne
Kenneth A. Merchant and Wim A. Van der Stede*
Cathleen L. Miller, Donald B. Fedor, and Robert J. Ramsay
Sources of work-family conflict in the accounting profession
- William R. Pasewark and Ralph E. Viator
Viswanath Umashanker Trivedi and Janne Chung
Wim A. Van der Stede, Chee W. Chow, and Thomas W. Li
* Commissioned by S. Kaplan
ABSTRACTS
THe influence of Client Importance
on Juror Evaluations of Auditor Liability
Duane M. Brandon and Jennifer M. Mueller
Auburn University
ABSTRACT: This study examines whether client importance affects jurors’ evaluations of auditors. Specifically, we examine whether client importance is significantly related to juror evaluations of responsibility and blame as well as auditor liability and damage awards. The results indicate that when an auditor is involved in litigation associated with an audit client that is financially more important to the auditor, participants evaluated the auditor as less objective, more blameworthy, and more deserving of punishment. Client importance is also found to significantly affect jurors’ liability assessments. Further analysis indicates the effects of client importance on liability assessments can be attributed to independence perceptions. Despite these differences, results indicate only a marginally significant influence of client importance on punitive damage awards and no influence on compensatory damage awards.
Stan Davis
Wake Forest University
Todd DeZoort
The University of Alabama
Lori S. Kopp
University of Lethbridge
ABSTRACT: This study evaluates management accountants’ susceptibility to inappropriate obedience pressure to create budget slack in violation of corporate policy. We also evaluate links between pressure effects and perceived responsibility, decision justifications, and underlying ethical dimensions. The results of an experiment with 77 management accountants reveal that despite pervasive perceptions of ethical conflict, almost half of the participants violated explicit policy and created budgetary slack when faced with obedience pressure from an immediate superior. The results also indicate that participants who added slack to their initial budget recommendation found themselves less responsible for their budget decision than did participants who refused to add slack. In addition, a majority of the participants indicated that the creation of budgetary slack was unfair, unjust, and/or contrary to their duties.
Stock Recommendations as a Source of Bias in
Earnings Forecasts
Michael Eames
Santa Clara University
Steven M. Glover
Brigham Young University
Jane Jollineau Kennedy
University of Washington
Abstract: Recent scandals and controversies have focused substantial attention on the behavior of financial analysts. Responses such as the Sarbanes Oxley Act, new regulations at securities exchanges, and massive legal settlements are consistent with the perception that analysts’ research and stock recommendations exhibit significant self-serving bias. While anecdotal and legal evidence support the allegations that some analysts have intentionally mislead the investing public, recent archival research suggests unintentional cognitive processes also contribute to systematic bias in analysts’ forecasts (Eames et al. 2002). However, studies based on stock-market data cannot distinguish between unintentional cognitive processes and intentional bias stemming from economic incentives (e.g., trade boosting). In a laboratory experiment we eliminate economic incentives and find that cognitive processes unintentionally lead to earnings forecast bias. Our results suggest that recent regulations and policy changes by Congress, the Securities and Exchange Commission, exchange markets, and brokerage firms will not totally eliminate bias in analysts’ earnings forecasts.
Key Words: Analyst earnings forecast, framing, motivated reasoning, forecast bias.
Data: Contact the authors.
Discussion Timing and Familiarity
Michael Favere-Marchesi
Simon Fraser University
Abstract: I investigate how the trend in audit practice of including face-to-face discussions between the preparer and the reviewer affects audit team performance. Specifically, I focus on the timing of reviewer/preparer discussion and explore whether performance of the audit team in a task involving a review by interview process is affected by the timing of the discussion. The discussion timing compares senior/manager teams when review discussions are held either concurrently with or following the manager’s review of the senior’s work. Additionally, I explore how reviewers’ familiarity with preparers may also affect the audit team performance. Familiarity is examined by comparing senior/manager teams where the managers had either positive prior involvement or no prior involvement with the reviewed seniors.
The audit team performance in generating hypotheses in a preliminary analytical review case was measured to assess any differences due to those attributes. Consistent with expectations, I find that post-review discussion and familiarity with the preparers are both, independently, important sources of audit team performance gains in a review process that includes face-to-face discussions.
Keywords: Audit review, audit teams, discussion timing, familiarity.
The Effects of Experience on Complex Problem Representation and Judgment in Auditing: An Experimental Investigation
Constance M. Lehmann
University of Houston Clear Lake
Carolyn Strand Norman
Virginia Commonwealth University
Abstract: The purpose of this study is to investigate problem representation and judgment by auditing professionals within the context of a going-concern task. Our results suggest more experienced auditors have more concise problem representations than do novices. In addition, our results show that some types of concepts listed in the problem representation are associated with judgment, regardless of experience level.
This study makes several contributions. First, understanding differences in problem representation at different levels of experience (novice, intermediate, and experienced) gives insight into the process of how representations change as experience changes/develops. Understanding the development of “becoming qualified” to make judgments regarding the going-concern evaluation assists in (1) the development of teaching approaches for analyzing a company’s financial condition, and (2) professional development for less-experienced professionals. Further, our measure of problem representation, similar to that in Christ’s (1993) study, provides a task-sensitive measure of problem representation for accounting research. This should have important implications for understanding expertise development in complex problem-solving tasks that auditors and accountants face.
Key words: expertise, problem representation, going-concern, expert-novice paradigm
An Information Economic Perspective on Experimental Research in Accounting
Laureen A. Maines, Gerald L. Salamon and Geoffrey B. Sprinkle
Indiana University
Abstract: In this paper, we examine the role experimental research plays in developing accounting knowledge. We use as a framework for this examination an information economic perspective, positing that the general goal of accounting research is legitimate, consequential belief revision. We then evaluate how the characteristics of experimental research provide advantages and disadvantages in creating legitimate, consequential belief revision within the context of accounting issues. Throughout the paper, we provide guidance on how to design and implement experiments with the greatest potential to influence thought.
The Impact of Task Information Feedback on Ethical Reasoning
Dawn W. Massey
Fairfield University
Linda Thorne
York University
Abstract: This study investigates whether task information feedback (TIF) promotes 84 auditors’ and accounting students’ use of higher ethical reasoning, thereby increasing their tendency to consider the public interest in the resolution of ethical dilemmas. TIF is a type of feedback in which subjects are provided with guidance about the cognitive decision-making process they should use. In our experiment, subjects used higher ethical reasoning to resolve audit dilemmas after receiving TIF than they did before receiving TIF. Accordingly, our findings suggest that TIF is effective in promoting higher ethical reasoning and thus increasing the tendency of practicing and aspiring auditors to consider the public interest when resolving ethical dilemmas.
Data availability: Contact the first author regarding data availability.
Field-Based Research in Accounting:
Accomplishments and Prospects
Kenneth A. Merchant and Wim A. Van der Stede
University of Southern California
Abstract: This paper tabulates the field-based research in accounting that was published in the period 1981-2004 and discusses the use of this method and its contributions. It shows that the number of field research publications has grown significantly over this period but that use of the method is primarily confined to management accounting topics. The paper describes the major impacts that field research has had on the management accounting field, particularly in identifying leading edge practices and enhancing their scholarly exploration, thereby contributing to our understanding of the phenomena we research and linking our research with practice. We also suggest that similar contributions might be made if researchers in other fields employed field research methods more.
Effects of Discussion of Audit Reviews on Auditors’ Motivation and Performance
Cathleen L. Miller
University of Michigan - Flint
Donald B. Fedor
Georgia Institute of Technology
Robert J. Ramsay
University of Kentucky
Abstract: One important purpose of audit review is to provide feedback and on-the-job training (Libby and Luft 1993), but we know very little about the effectiveness of review as a feedback mechanism. Firms have recently been moving to including discussion of performance and audit findings as part of the review procedure (Rich et al. 1997). The purpose of this field survey is to explore whether the addition of such discussion to the review feedback process enhances preparers’ subsequent performance. By examining survey responses from both reviewers and preparers from actual audit engagements, we find that incorporating discussion of performance with written review notes does enhance preparers’ motivation to improve performance. However, experience moderates the effect of discussion on performance improvement as perceived by the reviewer. While discussion resulted in better performance for less experienced auditors, it appears to actually diminish performance improvement for more experienced preparers.
Key words: Audit, review, discussion, experience, feedback, motivation, performance,
Sources of Work-Family Conflict in the Accounting Profession
William R. Pasewark and Ralph E. Viator
Texas Tech University
Abstract: Turnover of experienced and well-trained professionals continues to be a problem for accounting firms. Much of the turnover is among individuals who are trying to satisfy demands of both work and family. This study examines the sources of work-family conflict and their association with job outcomes in the accounting profession. One source of work-family conflict, work interfering with the family (WIF), is found to significantly relate to job satisfaction and turnover intentions. Females are much more likely than males to experience turnover intentions when their work interferes with their family.
Another source, family interfering with work (FIW), is not significantly related to either job satisfaction or to turnover intentions when flexible work arrangements are offered, but is related to turnover intentions when flexible work arrangements are not offered. As currently offered, flexible work arrangements seem to be effective at reducing turnover related to FIW.
Key Words: work-family conflict; flexible work arrangements; job satisfaction; turnover
Data Availability: The survey data for this study is available from the authors.
The Impact of Compensation Level and Context on Income Reporting Behavior
in the Laboratory
Viswanath Umashanker Trivedi and Janne Chung
York University
Abstract: This study examines two methodological issues in judgment and decision making studies in accounting – compensation level and context – using an income reporting task. Previous research has not examined the joint effect of compensation level and context. Further, findings in previous research about these two variables may not extend to specific contexts such as an income reporting context. Specifically, the study examines the effect of different levels of compensation (including zero and very high values) on participants’ income reporting behavior in the laboratory. It also examines whether the use of tax-specific instructions results in differences in income reporting behavior compared to the use of context-free instructions. The study predicts that compensation level should not affect reporting income levels when the treatment is tax-specific due to the influence of social norms. The study also makes predictions based on expected utility theory in the context-fee treatment. An experimental study was carried out in India using college students that manipulated two types of context (tax-specific and context-free) and six levels of compensation, including no compensation, grouped into three levels -- Low, Medium, and High. The results show that compensation levels did not affect participants’ income reporting behavior in the tax-specific treatment but in the context-free treatment, participants’ income reporting behavior was negatively affected by the introduction of adequate compensation.
Key Words: Experimental economics, compensation, social norms, income reporting behavior.
Data Availability: Available upon request from the first author.
Strategy, Choice of Performance Measures, and Performance
Wim A. Van der Stede
University of Southern California
Chee W. Chow
San Diego State University
Thomas W. Lin
University of Southern California
Abstract: We examine the relationship between quality-based manufacturing strategy and the use of different types of performance measures, as well as their separate and joint effects on performance. A key part of our investigation is the distinction between financial and both objective and subjective nonfinancial measures. Our results support the view that performance measurement diversity benefits performance as we find that, regardless of strategy, firms with more extensive performance measurement systems – especially those that include objective and subjective nonfinancial measures – have higher performance. But our findings also partly support the view that the strategy-measurement “fit” affects performance. We find that firms that emphasize quality in manufacturing use more of both objective and subjective nonfinancial measures. However, there is only a positive effect on performance from pairing a quality-based manufacturing strategy with extensive use of subjective measures, but not with objective nonfinancial measures.
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Behavioral Research in Accounting (BRIA)
ABSTRACTS
2003
Volume 15
A publication of the Accounting, Behavior and Organizations Section of the American Accounting Association
John C. Anderson, Kimberly K. Moreno, and Jennifer M. Mueller
Donna D. Bobek and Richard C. Hatfield
Mandy M. Cheng, Peter F. Luckett, and Axel K-D. Schulz
Mandy M. Cheng, Axel K-D. Schulz, Peter F. Luckett, and Peter Booth
David P. Donnelly, Jeffrey J. Quirin, and David O’Bryan
Christine E. Early
The Effect of Client vs. Decision Aid as a Source of Explanations upon Auditors’ Sufficiency Judgments: A Research Note
John C. Anderson
San Diego State University
Kimberly K. Moreno
Virginia Polytechnic Institute and State University
Jennifer M. Mueller
Auburn University
ABSTRACT: This study examines whether auditors will rate explanations for an unusual fluctuation provided by a decision aid as more sufficient than the same explanations provided by a client, when the explanations are insufficient to account for the fluctuation. While prior research has addressed auditors’ sensitivity to the source reliability of various parties (e.g., client management, outside parties), little is known about auditors; perceptions of decision aids as an information source. Since a decision aid may be viewed as a highly objective source, auditors may tend to over-rate the sufficiency of explanations provided by a decision aid vs. those provided by a client. Our results show that auditors rated explanations provided by a decision aid as more sufficient than the same explanations provided by the client, when in fact the explanations were insufficient. These results suggest that more consideration be given to the impact of decision aids utilized in analytical review.
An Investigation of the Theory of Planned Behavior and the Role of Moral Obligation in Tax Compliance
Donna D. Bobek
University of Central Florida
Richard C. Hatfield
The University of Texas at San Antonio
ABSTRACT: In this study, Ajzen’s (1991) Theory of Planned Behavior is used as a theoretical framework to extend prior research examining taxpayers’ compliance intentions. Specifically, moral obligation is added to the theory’s explicit constructs: attitude, subjective norms (i.e., peer influence), and perceived behavioral control. Moral obligation was expected to be a moderating influence (Reckers et al. 1994), and therefore interaction effects were hypothesized.
The study was conducted in two phases. In the first phase, a procedure was used to determine the outcome beliefs that underlie taxpayers’ attitudes. These beliefs were incorporated into an attitude measure used in the second phase in which subjects responded to two of three tax-compliance scenarios. The data from phase two were analyzed using multinomial logistic regression. The results indicate that the model including moral obligation, provides a significant explanation of tax noncompliance in the three different scenarios. However, the interaction effect of moral obligation appears to be more complex than the relationship suggested by Reckers et al. (1994).
The Effects of Cognitive Style Diversity on Decision-Making Dyads: An Empirical Analysis in the Context of a Complex Task
Mandy M. Cheng
Peter F. Luckett
The University of New South Whales
Axel K-D. Schulz
The University of Melbourne
ABSTRACT: Some research has suggested multiple-format accounting feedback in an attempt to accommodate varying cognitive information processing styles (Gardner and Martinko 1996). This costly information solution, however, has not been widely adopted in practice. An alternative approach, which fits nicely with current team-orientation practices in the work place, is to create combinations of workers. These work groups can bear varying cognitive styles in solving complex business problems using accounting information. This study explores how cognitive style diversity affects the decision quality performance of dyads for a complex decision task. An experiment was performed to extend prior accounting studies into perception differences based on the sensor/intuitive dimension of the MBTI (Myers-Briggs Type Indicator) instrument, and how such differences affect users of performance reports in their decision-making processes. In this study, subjects were classified into sensor or intuitive dyad members, based on the Myers-Briggs MBTI instrument, and engaged in a task that involved a series of simulation production decisions with nonfinancial direct performance feedback. After controlling for task conflict, results showed significantly better decision performance for cognitively diverse dyads over homogenous sensor dyads. Similar performance differences, however, were not observed between cognitively diverse dyads and homogenous intuitive dyads. Task conflict was not significant in explaining differences in decision performance. These findings could have implications in the areas of management control system design and personnel management.
The Effects of Hurdle Rates on the Level of Escalation of Commitment in Capital Budgeting
Mandy M. Cheng
The University of New South Whales
Axel K-D. Schulz
The University of Melbourne
Peter F. Luckett
The University of New South Whales
Peter Booth
University of Technology, Sydney
ABSTRACT: This study proposes that organizations should consider project hurdle rates, as part of their control system design, to reduce escalation of commitment behavior in managers. In particular, we empirically examined the escalation of commitment tendencies in managers receiving organization-set, self-set, and no hurdle rates.
Consistent with prior expectations, we found self-set hurdle rates to be an effective control mechanism resulting in significantly lower levels of escalation of commitment. Contrary to expectations, however, organization-set hurdle rates were not effective. Self-set hurdle rates also resulted in significantly higher cut-off rates compared to the average return of the investment portfolio held by the managers.
As escalation of commitment has been recognized as a serious potential problem in organizations, the use of self-set hurdle rates is a step toward reducing the level of escalation tendencies in managers.
Auditor Acceptance of Dysfunctional Audit Behavior: An Explanatory Model Using Auditors’ Personal Characteristics
David P. Donnelly
University of Nevada, Las Vegas
Jeffrey J. Quirin
Wichita State University
David O’Bryan
Pittsburg State University
ABSTRACT: Dysfunctional behavior (DB) and staff turnover are associated with decreased audit quality (Public Oversight Board 2000). Dysfunctional behaviors such as premature sign-ff, gathering of insufficient evidence, altering or replacing audit procedures, and underreporting of time have negative effects on the auditing profession. While recent studies suggest that dysfunctional behavior is a widespread problem (Smith 1995; Otley and Pierce 1995), extant research fails to adequately explain the causes. In this study, the organizational behavior and industrial psychology literatures provide the basis for developing and testing a model that identifies locus of control, performance, and turnover intentions as determinants of auditor acceptance of DB.
Using cross-organizational design and a structural equation modeling technique, survey results from 106 auditors generally supported the explanatory model. Results indicate that auditors who are more accepting of DB ten to possess an external locus of control, report lower levels of self-rated performance, and exhibit higher turnover intentions. These results suggest that individual auditor characteristics play a role in identifying those who are more accepting of DB.
A Note on Self-Explanation as a Training Tool for Novice Auditors: The Effects of Outcome Feedback Timing and Level of Reasoning on Performance
Christine E. Early
University of Connecticut
ABSTRACT: This study extends a previous experiment (Earley 2001), showing how a “self-explanation” training intervention promoted learning in an auditing context. A causal model is proposed to examine the effect of providing outcome feedback (i.e. the correct answer) prior to or after self-explaining on the level of reasoning exhibited in self-explanations, and then the effect of level of reasoning on performance.
The model was tested through an experiment in which auditors were trained to assess the reasonableness of client-provided discount rates used in real estate valuation. The following three relationships were tested: (1) the effect of outcome feedback timing on the level of reasoning exhibited, (2) the effect of outcome feedback timing (without considering reasoning level) on performance, and (3) the diminishing effect of outcome feedback timing on performance when level of reasoning is introduced as a covariate, with level of reasoning then having a significant effect on performance. The results support the causal model, indicating that in the absence of outcome feedback, auditors exhibit a lower level of reasoning in their self-explanations, which then adversely affect their performance.
Behavioral Research in Accounting |
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Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
2001, Volume 13
- The Relative Importance of Management Fraud Risk Factors - Barbara A. Apostolou, John M. Hassell, Sally A. Webber, and Glenn E. Sumners
- The Relationship between Auditor Characteristics and the Nature of Review Notes for Analytical Procedure Working Papers - Brian Ballou
- A Research Note concerning Practical Problem-Solving Ability as a Predictor of Performance in Auditing Tasks - James Lloyd Bierstaker and Sally Wright
- An Analysis of Statistical Power in Behavioral Accounting Research - Susan C. Borkowski, Mary Jeanne Welsh, and Qinke (Michael) Zhang
- National Culture and the Implementation of High-Stretch Performance Standards: An Exploratory Study - Chee W. Chow, Tim M. Lindquist, and Anne Wu
- A Research Note on the Effects of Gender and Task Complexity on an Audit Judgment - Janne Chung and Gary S. Monroe
- Linking Participative Budgeting Congruence to Organization Performance - B. Douglas Clinton and James E. Hunton
- Role Stress, the Type A Behavior Pattern, and External Auditor Job Satisfaction and Performance - Richard T. Fisher
- Mitigating the Common Information Sampling Bias Inherent in Small-Group Discussion- James E. Hunton
- An Examination of Perceived Barriers to Mentoring in Public Accounting - Steven E. Kaplan, Annemarie K. Keinath, and Judith C. Walo
- Multiple Dimensions of Organizational Commitment: Implications for Future Accounting Research - Alice A. Ketchand and Jerry R. Strawser
- A Descriptive Analysis of the Content and Contributors of Behavioral Research In Accounting 1989–1998 - Michael Meyer and John T. Rigsby
This page was last updated on September 06, 2005 .
Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.
The Relative Importance of Management Fraud Risk Factors
Barbara A. Apostolou
Louisiana State University
John M. Hassell
Indiana University Indianapolis
Sally A. Webber
Northern Illinois University
Glenn E. Sumners
Louisiana State University
In an exploratory study, we report how 140 auditors rate the relative importance of 25 risk factors (red flags) identified in SAS No. 82. The Analytic Hierarchy Process (AHP) is used to produce a decision model for each subject, and mean decision models are reported for groups of subjects. The results indicate that management characteristics and influence over the control environment red flags were approximately twice as important as operating and financial stability characteristics red flags and about four times as important as industry conditions red flags. The three single most important red flags account for almost 40 percent of the total decision weight. A particularly interesting finding is that the mean decision models of 43 Big 5 auditors, 50 regional/local-firm auditors, and 47 internal auditors were not significantly different from each other.
The Relationship between Auditor Characteristics and the Nature of Review Notes for Analytical Procedure Working Papers
Brian Ballou
Auburn University
This study investigates the auditor characteristics that are related to generation of evidence and documentation review notes by reviewers of audit working papers. To address this question, an analysis was conducted on the contents of review notes prepared in a laboratory experiment. The working papers contained no documentation deficiencies but contained insufficient evidence. As part of an effective review process, the auditor should generate review notes that call for additional evidence gathering. Generating documentation-oriented review notes created inefficiencies for carrying out the review process and corresponding audit task. Stepwise multiple regression analyses identified reviewer characteristics that were significantly associated with each type of review note. These results provide insights into the reviewer characteristics associated with focusing attention on one review-note classification instead of the other. This finding suggests opportunities for future research that more thoroughly explores and controls for the variables identified in this study.
A Research Note concerning Practical Problem-Solving Ability as a Predictor of Performance in Auditing Tasks
James Lloyd Bierstaker
Sally Wright
University of Massachusetts Boston
The ability to recognize when there is a variety of solutions to a particular situation has been shown to be important to success in the accounting profession (Baril et al. 1998). Recently, a measure of ability has been developed in psychology that focuses on “practical” problem-solving ability (PPSA) (Devolder 1993). From a theoretical standpoint, relatively little is known about the association between ability and performance in accounting tasks. Thus, the purpose of this study is to investigate if PPSA predicts performance on two important auditing tasks, internal-control-evaluation and analytical procedures. Participants in this study (66 auditors and 78 accounting students) assessed vignettes of real-world financial problems and provided solutions to these problems. Participants also solved an analytical procedures and internal-control-evaluation task. The results suggest that PPSA was useful in predicting the performance of both accounting students and experienced auditors on both analytical procedures and internal-control evaluation. This is the first accounting study to examine PPSA. Practically, results suggest it may be important to attract students with high PPSA into the accounting profession.
An Analysis of Statistical Power in Behavioral Accounting Research
Susan C. Borkowski
Mary Jeanne Welsh
Qinke (Michael) Zhang
La Salle University
Attention to statistical power and effect size can improve the design and the reporting of behavioral accounting research. Three accounting journals representative of current empirical behavioral accounting research are analyzed for their power (1 – b), or control of Type II errors (b), and compared to research in other disciplines. Given this study’s findings, additional attention should be directed to adequacy of sample sizes and study design to ensure sufficient power when Type I error is controlled at a=.05 as a baseline. We do not suggest replacing traditional significance testing, but rather augmenting it with the reporting of b to complement and interpret the relevance of a reported a in any given study. In addition, the presentation of results in alternative formats, such as those suggested in this study, will enhance the current reporting of significance tests. In turn, this will allow the reader a richer understanding of, and an increased trust in, a study’s results and implications.
National Culture and the Implementation of High-Stretch Performance Standards: An Exploratory Study
Chee W. Chow
San Diego State University
Tim M. Lindquist
University of Northern Iowa
Anne Wu
National Chengchi University
This study explores how national culture affects employees’ reaction to different modes of implementing high-stretch performance standards. An experiment was performed using Chinese and U.S. nationals to represent cultures that diverge on two relevant dimensions: power distance and individualism/collectivism. Consistent with culturally based expectations, Chinese nationals more readily accepted imposed high-stretch performance standards—relative to U.S. nationals—as manifested by the degree to which they performed up to those standards. Also, differences were found between Chinese and U.S. nationals’ satisfaction with high-stretch performance standards under autocratic vs. consultative participation in the standard-development process. However, further analysis was unable to dismiss the possibility that this result, which was based on subjects’ self-reports on Likert-scale questions, could have been an artifact of cross-national, response-set bias. Other findings indicated that national-culture effects arose in more complex ways than were originally conceived.
Return to BRIA 2001Contents |
A Research Note on the Effects of Gender and Task Complexity on an Audit Judgment
Janne Chung
York University
Gary S. Monroe Edith
Cowan University
This study examines the effects of gender and task complexity on the accuracy of audit judgments. Because research in cognitive psychology and marketing suggests that females may be more accurate decision makers in complex decision tasks, we hypothesize that there will be a significant interaction between gender and task complexity on the accuracy of an audit judgment. A 2 × 2 full factorial experiment (males/females by high-/low-task complexity) was carried out. The number and consistency of cues was manipulated to create the high- and low-complexity conditions. Participants were required to judge whether an inventory balance was fairly presented based on case material that contained a material misstatement in the inventory account balance. The results support the hypothesis.
Linking Participative Budgeting Congruence to Organization Performance
B. Douglas Clinton
Central Missouri State University
James E. Hunton
University of South Florida
This study proposes and tests a research framework that links the perceived need for participation (PNP) and the degree of participation allowed (DPA) to organizational consequences. We examine the extent of agreement between PNP and DPA, which is defined as the degree of participation congruence (DPC), and link DPC to organizational performance. Survey data were collected from 386 accountants across three industries. Consistent with prior research, the correlation between organizational performance indicators and DPA was weak in this study, as was the correlation between PNP and organizational outcomes. However, the correlation between the DPC and organizational performance indicators was uniformly positive and significant. Research findings suggest that participation congruence may be a critical success factor in designing an effective participative budgeting strategy.
Role Stress, the Type A Behavior Pattern, and External Auditor Job Satisfaction and Performance
Richard T. Fisher
Lincoln University
This study examines the relationship between elements of role stress and two important external auditor job outcome variables: job satisfaction and performance. The study extends prior research by examining the moderating influence of the Type A behavior pattern on these relationships. The need to re-examine the linkages between the elements of role stress and both job satisfaction and job performance using theoretically based moderators, such as the Type A behavior pattern, has been highlighted in the role-stress literature. Analysis of survey data confirmed that both role conflict and role ambiguity are significantly negatively associated with auditor job performance and job satisfaction. However, the expected moderating role of the Type A behavior pattern on the relationships between the components of role stress and job satisfaction and auditor job performance was not found. Interestingly, however, a direct positive relationship between the Type A behavior pattern and both job outcome variables was apparent. The latter result suggests that, among audit professionals, Type A individuals tend to outperform and be more satisfied with their employment than Type Bs.
Mitigating the Common Information Sampling Bias Inherent in Small-Group Discussion
James E. Hunton
University of South Florida
Gathering problem-relevant information through small-group discussion is one method for initial decision making. A collective information sampling (CIS) model offered by Stasser and Titus (1987) suggests that two inherent biases, the common information sampling bias and a related recency effect, act in concert to suboptimize the efficacy of group discussion. The objectives of this exploratory study are to refine the predictive validity the CIS model and test a group intervention technique designed to mitigate the common information sampling and recency biases.
Analysis of the evidence from a laboratory and field experiment suggests that the refined CIS model accurately predicted the distribution of information items entered into group discussion. While the control groups exhibited both the common information sampling bias and primacy effect, these biases were mitigated in the treatment groups after receiving an intervention technique called Shared Cognition Awareness Training (SCAT). Results obtained from this exploratory research indicate that the refined CIS model can offer researchers a useful prediction tool and the SCAT intervention technique presents a relatively straightforward means of invoking a more complete exchange of potentially valuable information during small-group discussion.
An Examination of Perceived Barriers to Mentoring in Public Accounting
Steven E. Kaplan
Arizona State University
Annemarie K. Keinath
Indiana University Northwest
Judith C. Walo
Central Connecticut State University
While both mentoring and peer relationships exist among some auditors in public accounting, little is known about these relationships. The purpose of this paper is to provide evidence on perceived barriers to mentoring and peer relationships in public accounting. Analysis of responses indicated three interpretable factors representing barriers to forming mentoring relationships. First, participants without a mentor perceived greater barriers from access to mentors and from willingness of the mentor. Gender differences were significant in all three factors. Partners perceived barriers from access to mentors to be lower than those perceived by the other ranks. Finally, willingness of the mentor was perceived to be a greater barrier by local firm participants than by intermediate or Big 5 firm participants.
Multiple Dimensions of Organizational Commitment: Implications for Future Accounting Research
Alice A. Ketchand
Sam Houston State University
Jerry R. Strawser
University of Houston
Organizational commitment (OC) is a concept that seeks to capture the nature of the attachments formed by individuals to their employing organizations. Beginning with Porter et al. (1974), prior researchers have attempted to identify what factors influence the formation of OC in individuals and how OC (once formed) influences important organizational consequences. Recent research in the industrial/organizational psychology and organizational behavior literature has identified the existence of multiple dimensions of OC and found different relationships between these dimensions and important organizational consequences. However, with some isolated exceptions (Ketchand and Strawser 1998; Kalbers and Fogarty 1995; Caldwell et al. 1990), accounting research has examined only one dimension of OC. This manuscript summarizes previous research in the industrial/organizational psychology, organizational behavior, and particularly accounting literature regarding the identification of various dimensions and subdimensions of OC and the relationships of these dimensions and subdimensions with important antecedents, correlates, and consequences. In light of these findings, suggestions are provided for accounting researchers to evaluate: (1) the role of multiple dimensions of OC in influencing attachment to the organization, (2) how changes in the public accounting work environment affect the role of OC, and (3) how OC research can provide practical results for public accounting firms.
A Descriptive Analysis of the Content and Contributors of Behavioral Research In Accounting 1989–1998
Michael Meyer
Southeastern Louisiana University
John T. Rigsby
Mississippi State University
This paper provides a description of the topical content and research methods used in BRIA during its first ten years using a modified Birnberg and Shields (1989) taxonomy of the “schools” of behavioral research, leading to an analysis of the impact of BRIA on the accounting literature. The authors and their schools of affiliation and degree are then examined. Next, cites used in BRIA are analyzed, and the most-cited authors, articles, and journals are indicated. The journals cited in BRIA are also ranked, both by total citation count over the ten-year period, and using a modal citation age in BRIA of four years, to show a change in the citation pattern in BRIA. In addition, we examine the extent to which BRIA is cited in four leading accounting journals, i.e., The Accounting Review; Contemporary Accounting Research; Accounting, Organizations and Society; and AUDITING: A Journal of Practice & Theory. Finally, findings and conclusions of the study are discussed.
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
2000, Volume 12
- Organizational Design and Manipulative Behavior: Evidence from a Negotiated Transfer Pricing Experiment - Dipankar Ghosh
- Antecedents and Consequences of Burnout in Accounting: Beyond the Role Stress Model - Timothy J. Fogarty, Jagdip Singh, Gary K. Rhoads, and Ronald K. Moore
- Group Decision Making: The Impact of Opportunity-Cost Time Pressure and Group Support Systems - Vicky Arnold, Steve G. Sutton, Stephen C. Hayne, Charles A. P. Smith
- The Use of Foresight Decision Aids in Auditors’ Judgments - D. Jordan Lowe, Philip M. J. Reckers
- The Role of Ambiguity in Auditors’ Determination of Budgeted Audit Hours - A. Kay Guess, Timothy J. Louwers, Jerry R. Strawser
- The Development of Two Measures to Assess Accountants’ Prescriptive and Deliberative Moral Reasoning - Linda Thorne
- Effects of Information Load on Capital Budgeting Decisions - Monte R. Swain, Susan F. Haka
- Participation and Performance in Capital Budgeting Teams - Peter Chalos, Margaret C. C. Poon
- The Use of and Selection Biases Associated with Nonstatistical Sampling in Auditing - Thomas W. Hall, James E. Hunton, Bethane Jo Pierce
- An Examination of the Positive Test Strategy in Auditors’ Hypothesis Testing - Bonita K. Peterson, Bernard Wong-On-Wing
- A Research Note Concerning the Dimensionality of the Professional Commitment Scale - Peggy D. Dwyer, Robert B. Welker, Alan H. Friedberg
This page was last updated on September 06, 2005 .
Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.
Organizational Design and Manipulative Behavior: Evidence from a Negotiated Transfer Pricing Experiment
Dipankar Ghosh
University of Oklahoma
This research examines the implications of complementarity of organizational design involving two key factors associated with transfer pricing, sourcing and compensation structure, on the behavior of negotiators determining transfer prices. The results demonstrate that the transfer pricing policy is perceived as unfair when organizational designs are not complementary compared to when the designs are complementary. Further, in the absence of complementary designs, the manipulative disposition of negotiators is a significant predictor of which negotiator will achieve higher outcomes in dyadic negotiations of transfer prices. Thus, the motivation of organizational members is not simply an exogenous variable to which the organizational design needs to be altered, but is endogenous to the system, being in part the result of the organizational design. This has implications for control systems since both the organization designs that define the scope of control systems and the behavior due to organizational designs are antecedents to the behavior from control systems.
Antecedents and Consequences of Burnout in Accounting: Beyond the Role Stress Model
Timothy J. Fogarty
Case Western Reserve University
Jagdip Singh
Case Western Reserve University
Gary K. Rhoads
Brigham Young University
Ronald K. Moore
Pocatello, Idaho
The burnout condition of employees is a well-known phenomenon in psychology and several applied business disciplines. Despite some degree of recognition in the practice community, little explicit recognition of this topic appears to exist in the accounting literature. This paper develops the burnout construct for the accounting occupation, in part by showing that it has not been captured by other concepts in the literature. In addition to showing that burnout is directly related to several of the familiar behavioral and attitudinal outcomes in public accounting practice, this paper proposes that burnout is a key mediator of the impact of role stressors on critical outcomes. Within a national sample of accountants, the burnout condition is found to partially mediate the influence of role conflict, role ambiguity, and role overload on satisfaction, performance, and turnover intentions. To some extent, burnout is capable of separating the functional and dysfunctional aspects of the role stressors on these job outcomes. In order to provide greater direction for future research, a separate treatment of each of the three dimensions of burnout is provided.
Group Decision Making: The Impact of Opportunity-Cost Time Pressure and Group Support Systems
Vicky Arnold
Steve G. Sutton
Texas Tech University
Stephen C. Hayne
Arizona State University West
Charles A. P. Smith
SPAWAR Defense Center
This paper reports on an experimental study designed specifically to examine the impact of opportunity-cost time pressure on group decision making during completion of an audit judgment task. In Phase I of the study, trained audit students, working in groups, completed a series of materiality judgments in both the presence and the absence of time pressure. In Phase II of the study, the experiment was replicated with a second set of subjects where communication was assisted through the use of a Group Support System (GSS).
The results of Phase I indicate that the groups became more efficient in their information search strategy, but chose to accelerate their decision-making approach rather than alter the information load from the available cues. These actions are consistent with underlying theory and result in a significant decrease in decision quality under time pressure. Phase II provides similar results for information processing, and also indicates that use of the GSS led to slower processing of information cues and a corresponding increase in time required to reach a group decision. Additionally, a comparison of the two groups indicates that the GSS may have impeded the decision quality.
The Use of Foresight Decision Aids in Auditors’ Judgments
D. Jordan Lowe
University of Nevada, Las Vegas
Philip M. J. Reckers
Arizona State University
A major cause of the expectation gap may be attributable to the different time frames in which auditors and judges/jurors view auditor performance. In our legal system, hindsight judgments are used to evaluate auditor decisions performed in foresight. The effect of outcome knowledge is to create a gap between hindsight and foresight perspectives. The purpose of this research is to evaluate whether it is possible to alter auditors’ foresight expectations to approximate a hindsight perspective. Specifically, we propose that foresight strategies embedded into two separate decision aids could mitigate hindsight effects. An experiment was conducted with 131 audit seniors from one of the Big 5 public accounting firms. Our results indicate that one of the decision aids was effective in mitigating hindsight effects. These results suggest that auditors’ ex ante decision process can be altered so their judgments approximate those of ex post evaluators. This has implications for audit legal liability as it suggests that rather than focusing exclusively on influencing judges’ and jurors’ expectations in hindsight, it may be expedient to also modify auditor expectations in foresight.
The Role of Ambiguity in Auditors’ Determination of Budgeted Audit Hours
A. Kay Guess
St. Edward’s University
Timothy J. Louwers
Louisiana State University
Jerry R. Strawser
University of Houston
This is a study which investigates the role of ambiguity on auditors’ consideration of risk factors and subsequent determination of budgeted audit hours during the planning stages of audit examinations. Eighty-five practicing auditors responded to an experimental case that provided background information regarding factors affecting inherent risk and control risk for a hypothetical audit and also requested them to estimate the number of planned audit hours for the engagement. Consistent with previous research (e.g., Dusenbury et al. 1996), our results indicated that both ambiguity and risk play significant roles in the auditor’s determination of the extent of substantive testing; however, the effect(s) of ambiguity are limited to engagements characterized by lower combined levels of risk. Some of our results are inconsistent with previous findings by Nelson and Kinney (1997), who reported a symmetric (moderating) effect of ambiguity on auditors’ decisions, suggesting that the influence of ambiguity may be dependent upon the decision context examined.
The Development of Two Measures to Assess Accountants’ Prescriptive and Deliberative Moral Reasoning
Linda Thorne
York University
The purpose of this study is to develop two measures of accountants’ prescriptive moral reasoning and deliberative moral reasoning. Past accounting ethics research adopting a cognitive-developmental perspective has focused on understanding the factors that promote accountants’ development of cognitive moral capacity. Cognitive moral capacity does not necessarily correspond to the moral reasoning that accountants apply to the resolution of ethical dilemmas in the work place. Cognitive moral capacity describes the most sophisticated moral reasoning of which an individual is capable, whereas moral reasoning describes the actual cognitive assessment an individual applies to a particular ethical dilemma. There are two different types of moral reasoning: prescriptive reasoning and deliberative reasoning. As applied to the ethical decision process of accountants, prescriptive reasoning is analogous to an accountant’s formulation of his or her professional judgment of the ideal resolution to an ethical dilemma, and deliberative reasoning is analogous to an accountant’s intention to exercise professional judgment to resolve an ethical dilemma. To develop two accounting-specific measures of prescriptive and deliberative moral reasoning, the Defining Issues Test (DIT) was selected as a prototype. Professional accountants and experts were used to ensure the cases and scoring of the measures elicited a representative moral reasoning process of accountants, according to a cognitive-developmental perspective. The validity and reliability of the accounting-specific measures are comparable to that found in the DIT. The results of comparisons of scores on the accounting-specific measures to their DIT scores suggests that accountants do not resolve ethical dilemmas at their cognitive moral capacity. Thus, the accounting-specific measures of moral reasoning may be useful in future research to investigate factors and approaches that will encourage accountants to resolve ethical dilemmas at their cognitive moral capacity.
Effects of Information Load on Capital Budgeting Decisions
Monte R. Swain
Brigham Young University
Susan F. Haka
Michigan State University
This study examined information load effects on information-processing behavior for 36 experienced and 48 inexperienced capital budgeters. Six capital investment choice scenarios were sequentially presented to each participant using a computerized process-tracing methodology. The amount of information attending each of the six choice tasks was randomly varied and indicators of the information search strategy employed were traced.
This is an extension of the information load effect to the capital budgeting domain. Results from this study are three-fold. First, consistent with related research, capital budgeters reduce the proportion of information searched and increase the variability in their search patterns as the information load increases. Second, contrary to prior research, our results suggest some adjustments to previous evidence demonstrating an effect of information load on the direction of search patterns. Finally, although information load interacts somewhat with an individual’s level of experience, the results did not clearly confirm that capital budgeting experience affects information search processes.
Participation and Performance in Capital Budgeting Teams
Peter Chalos
University of Illinois at Chicago
Margaret C. C. Poon
City University of Hong Kong
Increasingly, organizations rely on cross-functional teams in the development of capital budgeting projects. To date, no studies appear to have examined conditions that affect team performance. Using structural equation analysis, this study of 177 managers in 55 capital budgeting teams examined the mediating effects of information sharing and budget performance emphasis between team budget participation and performance. A structural model provided a strong fit of the hypothesized relationships. The posited mediating effects were significant, suggesting the importance of contextual variables upon team performance. The effect of hierarchical controls on team performance was also examined. No performance effects were found.
The Use of and Selection Biases Associated with Nonstatistical Sampling in Auditing
Thomas W. Hall
University of Texas at Arlington
James E. Hunton
University of South Florida
Bethane Jo Pierce
University of Texas at Arlington
This study investigated the extent to which nonstatistical sampling procedures are used by practicing auditors and tested the most popular form of nonstatistical sampling for evidence of selection biases. Respondents to a survey of practicing auditors reported that nonstatistical procedures are used in approximately 85 percent of all audit sampling applications. Within the domain of nonstatistical sampling, approximately 90 percent of the applications utilize a form of nonstatistical sampling known as haphazard selection. In a laboratory experiment, audit samples chosen via haphazard selection were tested for the existence of selection biases. These samples were found to exhibit selection biases in favor of larger, more brightly colored, and more conveniently located population elements, as well as elements with fewer adjacent neighbors. In extreme cases, selection likelihoods for certain population elements were approximately eight times larger than likelihoods for other elements. Study results suggest that organizations using haphazard selection procedures and standard-setting bodies in the accounting profession should reexamine the acceptability of haphazard selection and further develop guidelines for its use.
An Examination of the Positive Test Strategy in Auditors’ Hypothesis Testing
Bonita K. Peterson
Montana State University
Bernard Wong-On-Wing
Washington State University
Studies on the extent of confirmation bias among auditors have obtained mixed results. Based on Klayman and Ha (1987, 1989), this study is an examination of confirmation bias in terms of a positive test strategy. The results suggest that inconsistent findings of prior studies may be attributed to the failure to consider intermediate hypotheses. Auditors in this study employed a predominantly positive test strategy. Moreover, contrary to prior implications, the strategy was found to be a useful heuristic for determining the truth of a hypothesis in some conditions.
A Research Note Concerning the Dimensionality of the Professional Commitment Scale
Peggy D. Dwyer
University of Central Florida
Robert B. Welker
Southern Illinois University at Carbondale
Alan H. Friedberg
Florida Atlantic University
Accounting researchers investigating the construct of professional commitment have generally measured professional commitment using a 15-item scale. A previous study of the psychometric properties of that scale suggested that the scale may capture more than one dimension of commitment. The present study was designed to examine additional psychometric properties of the 15-item professional commitment scale. Analysis of responses collected from 159 practicing accountants suggests that the professional commitment scale contains potentially spurious dimensions. The 15-item scale was pared down to a five-item scale that may provide a more clearly interpretable and parsimonious measure of affective professional commitment.
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
1999, Volume 11
- A Comprehensive Taxonomy of Audit Task Structure, Professional Rank and Decision Aids for Behavioral Research - Mohammad J. Abdolmohammadi
- Budgeting and the Management of Role Conflict in Hospitals - Sue E. Comerford and Margaret A. Abernethy
- Supervision Practices and Audit Effectiveness: An Empirical Analysis of GAO Audits - Parveen P. Gupta, Narayan S. Umanath, Mark W. Dirsmith
- A Cross-Cultural Investigation of Managers’ Project Evaluation Decisions - Paul D. Harrison, Chee W. Chow, Anne Wu, Adrian M. Harrell
- The Role of Procedural and Declarative Knowledge in Performing Accounting Tasks - Paul J. Herz and Joseph J. Schultz, Jr.
- The Influence of Budget Goal Attainment on Risk Attitudes and Escalation - Linda V. Ruchala
- Taxpayer Preference Between Income Tax and Consumption Tax: Behavioral Life Cycle Effects - Raymond A. Zimmermann, Patricia Eason, Mary Gowan
This page was last updated on September 06, 2005 .
Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.
A Comprehensive Taxonomy of Audit Task Structure, Professional Rank and Decision Aids for Behavioral Research
Mohammad J. Abdolmohammadi
Bentley College
The primary objective of this paper is to provide a descriptive database on task structure, minimum professional rank and decision aids applicable to perform each task in a comprehensive inventory of audit tasks. In addition, analysis of the data and insight are provided as a means of motivating future behavioral research, particularly in areas of expertise, staff training and assignment, and decision aid development. To achieve these objectives, a comprehensive inventory of audit tasks was developed and presented to audit managers and partners for their assessment of task structure, professional rank and decision aids. The data are presented by various audit phases and in detail for each of the 332 audit tasks investigated.
Budgeting and the Management of Role Conflict in Hospitals
Sue E. Comerford and Margaret A. Abernethy
University of Melbourne
Economic, political and social pressures have created an environment where it is considered critical for professionals performing health care services to extend their role to encompass the financial management of hospital resources. Prior research has argued that this dual role can potentially have adverse organizational consequences, through the creation of role conflict. Professionals tend to have a high commitment to professional values but a low commitment to managerial values and, thus, directly involving them in financial controls, such as budgeting, is likely to lead to role conflict. This paper argues that role conflict is not inevitable in this circumstance. It extends prior research by testing the proposition that individuals with a high professional orientation will not necessarily experience role conflict when involved in budgeting, provided they are committed to the managerial goal set. An empirical study, based on data collected from health care professionals in a large Australian public teaching hospital, was undertaken to test this proposition. The results support the position taken in the paper.
Supervision Practices and Audit Effectiveness: An Empirical Analysis of GAO Audits
Parveen P. Gupta
Lehigh University
Narayan S. Umanath
University of Cincinnati
Mark W. Dirsmith
Pennsylvania State University
Generally accepted auditing standards promulgated by the U.S. General Accounting Office (GAO) and AICPA (1982) require the supervision of auditors. Earlier research on auditor supervision yielded relatively weak and conflicting results, and little effort has been devoted to examining the relationship between audit tasks, supervision practices, and the effectiveness of actual audit teams. In addition, this prior research examined auditors solely from public accounting firms, with virtually no attention being paid to auditors within the GAO.
Using work unit contingency theory, it is hypothesized here that when supervision practices (expressed in terms of bureaucratic, personal and group modes of control) fit the level of complexity and interdependence of audit tasks, as well as audit team size, audits will be performed more effectively. To evaluate this hypothesis, we administered test instruments to 299 auditors from 96 actual GAO audits. Using canonical correlation analysis, we found that GAO audit team effectiveness is significantly higher when the supervision practices fit the nature of the interdependence relations, as well as the size of the audit team. The study concludes by explaining the implications for practice and future research.
A Cross-Cultural Investigation of Managers’ Project Evaluation Decisions
Paul D. Harrison
University of South Carolina
Chee W. Chow
San Diego State University
Anne Wu
National Chengchi University (Taipei)
Adrian M. Harrell
University of South Carolina
In the current era of intensifying competition and globalization, an increasingly important issue is how to ensure timely responses to continuing or discontinuing a declining or unprofitable project. There also exists a need to know how project evaluation decisions will differ across national settings.
This study contributes insights into this question by testing how private information, the potential for personal gain and national culture affect decision makers’ choice of whether to continue or discontinue a project projected to become unprofitable in the future. Experimental data from 230 U.S. and Chinese nationals indicated that: (1) when they had private information and the potential for personal gain, both national groups had a greater propensity to continue the unprofitable project, and (2) the Chinese subjects had less of an inclination to continue the unprofitable project than their U.S. counterparts. These results imply that both national culture and attributes of the employment setting affect employees’ behavior, which in turn affects firm profitability.
The Role of Procedural and Declarative Knowledge in Performing Accounting Tasks
Paul J. Herz
Western State College of Colorado
Joseph J. Schultz, Jr.
Arizona State University
Cognitive research in accounting and auditing has focused on expertise and how that expertise is obtained. Implications include expert system construction, training and personnel assignment. Determining experts and eliciting their knowledge, however, is threatened by the dissociation between declarative and procedural knowledge. Gauging declarative knowledge relies on one’s ability to verbalize pertinent facts or processes; measuring procedural knowledge is more subtle as it relies on “automatic” linkages to performance that gradually deny access to declarative knowledge. This distinction limits experienced auditors’ ability to demonstrate their knowledge via ordinary recall or recognition measures commonly used in accounting studies.
Sixty-six advanced accounting students performed a structured accounting task in a computerized experimental setting to document the role of procedural knowledge within an accounting context. The participants practiced various combinations of the task to allow for development of “expertise,” and, subsequently, for testing of several propositions.
Findings indicate general support for the role that procedural knowledge plays in the accounting arena. These results suggest that more emphasis should be placed on performance in determining expertise, that caution should be exercised in eliciting experts to build expert systems, and that ACT* theory may represent a sound framework for studying such matters.
The Influence of Budget Goal Attainment on Risk Attitudes and Escalation
Linda V. Ruchala
University of Nebraska–Lincoln
This study is an investigation of whether individuals who are not achieving budget goals will make riskier project investment decisions than individuals who are attaining budget goals and whether bonus-based compensation exacerbates this effect. This study also explores whether making riskier investment decisions extends to project escalation when expected value analysis would suggest that such continuance is not advantageous to achieving budget goals. Finally, the relationship between the duration of effort and project escalation is tested.
A two-period interactive computer experiment was conducted using 60 student subjects to test the research hypotheses. A two-factor, between-subjects design crossed two forms of performance-based compensation (bonus-based and profit-sharing) with achievement and nonachievement of a budget goal. Baseline risk attitudes, choice of investment projects, and the decision to continue a failing project were measured in this study, as was the duration of effort. The results support the proposition that individuals make riskier investment decisions when they are not achieving budget goals. Subjects not meeting budget goals and compensated with bonus-based incentives made the riskiest investment decisions. The increased willingness to take risks does not extend to project escalation. Individuals who took more time to analyze the investment options were less likely to escalate.
Taxpayer Preference Between Income Tax and Consumption Tax: Behavioral Life Cycle Effects
Raymond A. Zimmermann
Patricia Eason
The University of Texas at El Paso
Mary Gowan
University of North Carolina at Charlotte
Public opinion surveys have documented a shift in the characterization of the income tax as the fairest tax in 1972 to the least fair tax in 1994. One potential explanation for this shift lies in Shefrin and Thaler’s (1988) Behavioral Life Cycle Hypothesis (BLCH). According to Shefrin and Thaler (1988), BLCH individuals maximize lifetime satisfaction as they advance through the life cycle by (1) exercising increased self-control in deferring consumption to later periods; (2) mentally segregating income into distinct accounts which carry different marginal propensities to consume; and (3) adjusting their saving rate on the basis of perceived gains/losses in these accounts. Anything that is perceived to permanently affect relative prices between these accounts would affect savings returns.
Given that the primary difference between income and consumption taxation lies in the taxation of savings yields, the relative price of saving is often affected by changes in tax law. BLCH individuals might view increased income taxes as a penalty on their own productive performance (i.e., diminished returns on accumulated savings). If true, BLCH suggests that individual preference between increases in income taxes vs. consumption taxes might depend, in part, on a person’s position in the life cycle. In an aging population, the results of this study suggest that shifting public preference from income taxation to consumption taxation may be related to changing demographics.
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
1998, Volume 10 Supplement
- Foreward - Seleshi Sisaye
- Part I. Evolution of Behavioral Approaches in Accounting Research
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- The Ascendancy of the Behavioral Paradigm in Accounting: The Last 20 Years - Thomas R. Dyckman
- Part II. Social and Behavioral Sciences Applications in Accounting and Management Control Research
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- An Overview of the Social and Behavioral Sciences Approaches in Management Control Research - Seleshi Sisaye
- Some Reflections on the Evolution of Organizational Control - Jacob G. Birnberg
- Contingency Theory, Management Control Systems and Firm Outcomes: Past Results and Future Directions - Joseph G. Fisher
- Part III. Experimental Economics in Behavioral Accounting Research
-
- Bargaining Strategy and Accounting Information About Opponents’ Payoffs: Bargaining in a Hall of Mirrors - Joan L. Luft, Susan F. Haka and Brian Ballou
- Commentary by John H. Evans III
- Part IV. Decision Aids in Auditing
-
- Anchoring Effects Associated With Recommendations From Expert Decision Aids: An Experimental Analysis - Tamara K. Kowalczyk and Christopher J. Wolfe
- Commentary by Douglas F. Prawitt
- Influencing Decision Aid Reliance Through Involvement in Information Choice - Stacey M. Whitecotton and Stephen A. Butler
- Commentary by Richard W. Houston
- Part V. Exploratory Study in Group Behavior
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- Sources of Process Gain and Loss From Group Interaction in Performance of Analytical Procedures - Jean C. Bedard, Stanley F. Biggs and James J. Maroney
- Commentary by Eric N. Johnson
- Part VI. Research on International Issues
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- The Effect of CEO Disclosure Beliefs on the Volume of Disclosure About Corporate Earnings and Strategy - A. Jane Craighead and Jon Hartwick
- Commentary by Jane M. Cote
- Part VII. Research Note: Career Issues in CPA Firms
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- The Role of Peer Relationships During CPA Firm Mergers - Philip H. Siegel, Alan Reinstein, Khondkar E. Karim and John T. Rigsby
- Commentary by Sandra C. Vera-Muñoz
This page was last updated on September 06, 2005 .
Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.
FOREWORD
The papers in the Supplement are grouped into seven subject areas: evolution of behavioral approaches in accounting research, management control, experimental economics, auditing, and international accounting among others. These papers utilize various research methodologies: experiments, surveys, in-depth interviews, protocol analysis, field studies and archival research. They represent the various research methods currently used by behavioral accounting researchers. As such, these papers provide a forum for discussion and future research in their respective subject areas.
A number of individuals have contributed to the success of the conference. Publication of this Supplement would not have been possible without the support of W. Steve Albrecht, President of AAA (1997/98) and the AAA Executive Committee. I am particularly indebted to Steve, the AAA Executive Committee members, and the ABO Board of Trustees (Andrew D. Bailey, Mary S. Stone and Jan R. Williams) for making the necessary financial arrangement with the ABO Section to publish the Supplement. Mr. Craig Polhemus, AAA Executive Director, provided generous assistance for the 1997 ABO Research Conference and the publication of this Supplement. His administrative staff, Debbie Gardner, Jim De La, Beverly Harrelson, Roland LaTulip and Mary Cole; and the AAA Meeting Coordinators, Dee Strathan and Debbie Gouwens, have provided technical and logistic support both for the conference and the Supplement. Joe Schultz has been instrumental in facilitating the completion of the conference. The ABO Board of Officers has supported and authorized the conference and the Supplement.
I am particularly grateful to members of the ABO Section and other AAA sections for their support and involvement at the conference as paper presenters, discussants, moderators and reviewers. I would like to thank the manuscript referees for their assistance in reviewing the papers on a timely basis, and am including the names of all referees who reviewed papers both for the conference and the Supplement.
I have benefited from my close working relationship with Jacob G. Birnberg and his experience as Editor of BRIA during 1995/1997. I am indebted to his suggestions for matching reviewers with their subject areas and grouping papers by topical areas for both the conference and the Supplement. Eileen Stommes provided editorial assistance in the preparation of the Supplement.
Duquesne University has assisted my efforts in organizing the conference. I would especially like to thank Thomas J. Murrin, Dean of the Palumbo School of Business; and Kenneth L. Paige, Coordinator of Accounting Program for their support of the project. Linda Cuda and Chris Koenig have provided secretarial support. My graduate assistants, Dilum Wijekon and Janna Miller, have been respectively involved in both the conference and the Supplement. I am grateful to them and to my colleagues in the ABO Section for their support of my endeavors. Their unfailing support made the timely completion of this project possible. Seleshi Sisaye, Duquesne University Editor, BRIA Supplement-Volume 10, 1998
Seleshi Sisaye, Duquesne University
Editor, BRIA Supplement-Volume 10, 1998
The Ascendancy of the Behavioral Paradigm in Accounting: The Last 20 Years
Thomas R. Dyckman, Cornell University
The purpose of this paper is to trace the growth of the behavioral paradigm in accounting. By examining the change in several measurable variables, I show that there has been a substantial increase in the impact of this paradigm over the period studied. This growth is documented by increases not only in the number of faculty selecting the behavioral designation to identify their area of interest, but also by the percentage who self identify. The increasing impact of the behavioral paradigm is also supported by an increase in the number and proportion of the articles using this approach that appear in the more prestigious accounting journals. I also document a series of events that have occurred over a more extended period of time that supported and contributed to the rise of behavioral science in the activities of accounting scholars. Finally, I take a look to the future.
An Overview of the Social and Behavioral Sciences Approaches
in Management Control Research
Seleshi Sisaye, Duquense University
This section of the supplement contains four papers that discuss social and behavioral sciences applications in accounting and control research. The authors apply macro perspectives at the group and organizational levels. This paper provides an overview of the differing approaches/perspectives used by the authors and describes their implications for future research on management control systems. The paper suggests that using multidisciplinary approaches in social and behavioral sciences would enrich future research on accounting and control systems in complex organizations.
Some Reflections on the Evolution
of Organizational Control
Jacob G. Birnberg, University of Pittsburgh
The focus of control systems has shifted from the problem of controlling the individual/task to the problem of controlling the organization. This change is due to the dynamic nature of the environment within which organizations now exist. This paper discusses the impact of that change on the organization’s control system. The primary impact has been on the role of feedback in the system. Feedback no longer serves to facilitate the control system’s convergence to equilibrium. In a dynamic setting, feedback is the vehicle through which “adaptive controls” and “playfulness” facilitate change and alter the nature of controls.
Contingency Theory, Management Control Systems
and Firm Outcomes: Past Results and Future Directions
Joseph G. Fisher, Indiana University
This paper examines the link between contingency theory and management control systems. Contingency theory states that the design and use of control systems is dependent upon the context of the organizational setting. A better match between the control system to the contingency variable is hypothesized to result in increased organizational performance. This paper identifies contingent control variables, defines the boundaries of control systems, and categorizes prior work by the analysis complexity. Even though this research stream has provided useful insights, many of the results are tentative and less than definitive. This paper concludes by proposing ways to strengthen contingency theory results.
Accounting and Control as Solutions to Technical Problems,
Political Exchanges and Forms of Social Discourse:
The Importance of Substantive Domain
Mark W. Dirsmith, Pennsylvania State University
The purpose of this paper is to offer suggestions for future research in accounting and control. It proceeds by first describing the three domains that comprise research—the conceptual, research methods and substantive domains—and suggests that our understanding of accounting and control may perhaps be best extended by intensively focusing on the substantive domain, or social/organizational setting of interest, and then drawing in relevant theoretical frameworks and methods. The paper then discusses the multiple roles of accounting and control systems as technical solutions to problems, political exchanges and forms of social discourse, and the research methods that may be used to study these roles.
Cost Management and Management Control
in Health Care Organizations: Research Opportunities
John H. Evans III, University of Pittsburgh
Healthcare organizations today face a myriad of challenges as they attempt to adapt to demands for improved quality and reduced cost. Their responses to these pressures provide accounting, behavior and organization (ABO) researchers an excellent laboratory in which to examine changes that also confront many other service organizations. Distinctive features that make this laboratory an appealing one are the existence of systematic, large-scale databases, the special role of teams and physicians and the current state of cost accounting information. Current empirical research in this area is described and categorized with an eye toward future research opportunities.
Using an Experimental Economics Approach
in Behavioral Accounting Research
Donald V. Moser, University of Pittsburgh
The paper begins with a brief comparison of the research perspectives of experimental economists vs. those of most behavioral accountants who conduct experiments. This is followed by a detailed description of two specific studies. The first study provides an example of the experimental economics approach, while the second study provides an example of the integration of this approach into a behavioral accounting study. These studies are used to illustrate the standard techniques and procedures used in experimental economics and compare them to those used in conventional behavioral accounting experiments. The potential costs and benefits of integrating aspects of the experimental economics approach into behavioral accounting experiments are discussed. The paper concludes with a discussion of how such an integrative approach could significantly increase the impact of behavioral accounting experiments.
Bargaining Strategy and Accounting Information
About Opponents’ Payoffs: Bargaining in a Hall of Mirrors
Joan L. Luft and Susan F. Haka
Michigan State University
Brian Ballou, Auburn University
Although accounting information is widely acknowledged to provide the basis for many contractual agreements, the impact of accounting information characteristics on bargaining behavior has received little research attention. The results reported in this manuscript demonstrate that the amount of uncertainty inherent in accounting information signals can impact bargaining behavior. In particular, offers and counteroffers observed in a bilateral bargaining setting, where accounting-based information about an opponent’s payoffs was less certain, are consistent with bargainers acting and opponents responding as if offers and counteroffers were strategic rather than informational. In more certain settings, however, bargainers were more likely to use offers and counteroffers to reveal reservation price information and opponents were more likely to believe bargainers’ offers revealed relevant information about bargainers’ preferences. We hypothesize that bargainers’ reflections (as in a hall of mirrors) of each other’s cognitions are impacted by the uncertainty of the signals generated by the accounting information system.
Anchoring Effects Associated With Recommendations
From Expert Decision Aids: An Experimental Analysis
Tamara K. Kowalczyk, University of Nevada, Las Vegas
Christopher J. Wolfe, Texas A&M University
This study investigates the effect of recommendations from an expert system on the judgment behavior of system users in an auditing task. Specifically, two experiments were conducted to determine whether the provision of such recommendations is associated with anchoring effects among users. “Anchoring” is a term used to describe a judgment bias that occurs when individuals cannot ignore certain knowledge when processing information in decision making. In each experiment, auditing students used an expert system that assisted in the evaluation of whether there existed substantial doubt about a company’s ability to continue as a going concern. We compared the assessments of users provided recommendations from the system to those not provided recommendations. The results provide evidence that anchoring effects can occur with the provision of recommendations from the expert decision aid. An important implication of these results is that anchoring on the advice of an expert decision aid can result in improper attention given to audit evidence that is inconsistent with the recommendation. Results from this and similar studies that examine the implications of expert system use on decision behavior can be useful in the development and implementation of effective intelligent decision aids.
Influencing Decision Aid Reliance
Through Involvement in Information Choice
Stacey M. Whitecotton, Arizona State University
Stephen A. Butler, University of Oklahoma
Prior research suggests that accounting decision makers are often unwilling to rely on decision aids, limiting their intended effectiveness. This study examines involvement in the aid’s development as a mechanism for decreasing decision-makers’ resistance to decision aids. We investigate whether the act of choosing the information for the decision aid increases decision aid reliance, and then examine the resulting impact of involvement on performance. As expected, decision makers were more willing to rely on a decision aid based on information they had selected than were decision makers without this type of involvement. However, the information chosen resulted in decision aids with lower predictive accuracy than the optimal decision aid. Although there were no significant differences in absolute performance related to information choice, there were significant performance improvements relative to the quality of the decision aid. These results highlight the importance of evaluating both decision aid reliance and predictive validity in determining decision aid success.
Sources of Process Gain and Loss
From Group Interaction in Performance
of Analytical Procedures
Jean C. Bedard, Northeastern University
Stanley F. Biggs, University of Connecticut
James J. Maroney, Northeastern University
Many business tasks are performed by people interacting in groups. While research on the effects of group interaction on task performance has been called for, few such studies have been done. Most studies conducted in audit settings stress that group interaction should result in performance gain. However, psychology literature also indicates that group interaction could result in reduced performance as a result of process loss. This paper explores decision processes of interacting audit groups and individual auditors when conducting analytical procedures. A model of group performance adapted from Steiner (1972) (Steiner's model) helps frame group process gain and loss issues. Decision process data are gathered from groups of auditors using think-aloud verbal protocols. Group decision processes and performance are compared to those of individual auditors from a prior study. Results indicate that groups exhibited some process gain (e.g., from knowledge pooling), which contributed to improved performance. However, process loss caused several groups to fail to select a correct hypothesis that had been considered, thereby preventing them from achieving their full potential. Specific sources of process gain and loss contributing to differential group performance are discussed, along with implications for audit practice regarding maximizing process gain and reducing process loss.
The Effect of CEO Disclosure Beliefs
on the Volume of Disclosure
About Corporate Earnings and Strategy
A. Jane Craighead, Concordia University and McGill University
Jon Hartwick, McGill University
This study investigates the association between managerial disclosure beliefs and firms’ disclosure activities. It adopts a cognitive perspective that posits beliefs underlie the performance of behaviors (Fishbein and Ajzen 1975); hence, managerial disclosure beliefs will be related to a firm’s voluntary disclosure practices. Managerial disclosure beliefs were measured through a survey of 68 CEOs of Canadian public companies. Firm disclosures were measured by the volume of disclosures about corporate earnings performance and changes in future corporate strategy contained in the Canadian Business and Current Affairs database.
The results show that managerial disclosure beliefs predict more than 20 percent of the variance in the volume of both earnings disclosures and strategy disclosures. Specifically, we found that firms with CEOs who believe that disclosure has certain benefits (for example, reductions in the firm’s cost of raising capital, or investors’ costs of gathering information) disclose more than other firms. Further, the CEOs of high disclosure firms believe that the market makes significant use of multiple sources of information, such as analysts’ forecasts of future earnings and information about corporate strategy, in valuing the firm. On the other hand, low disclosure firms were found to have CEOs who believe that the market is fixated on earnings per share data. These results indicate the importance of managerial disclosure beliefs in explaining why firms disclose differently on a voluntary basis.
RESEARCH NOTE:
The Role of Peer Relationships
During CPA Firm Mergers
Philip H. Siegel, Long Island University
Alan Reinstein, Wayne State University
Khondkar E. Karim, Long Island University
John T. Rigsby, Mississippi State University
This paper analyzes peer relationships in work settings by examining 16 peer relationships in a southwestern city shortly after the merger of two international accounting firms. We conducted a field study to examine why individuals form and keep peer relationships within the context of organizational and task uncertainty created by a merger. We found the functions performed by peer relationships were almost exclusively concentrated in the psychosocial area during the merger. The utilization of peer relationships was spread broadly across the firm, irrespective of education, experience or organizational level. The formation and maintenance of peer relationships appears to be an important reaction to the uncertainty and learning requirements imposed by the merger process.
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
1997, Volume 9 Supplement
- The Effects of Interference and Availability From Hypotheses Generated by a Decision Aid Upon Analytical Procedures Judgments - John C. Anderson, Steven E. Kaplan and Philip M. J. Reckers
- Commentary by Dana R. Hermanson, Kennesaw State University
- The Relationship Between an Individual's Values and Perceptions of Moral Intensity: An Empirical Study - Gail B. Wright, Charles P. Cullinan and Dennis M. Bline
- Commentary by Michael K. Shaub Hillsdale College
- Some Determinants of Analysts' Forecast Accuracy - Dipankar Ghosh and Stacey M. Whitecotton
- Commentary by D. Eric Hirst University of Texas at Austin
- The Effects of Audit Structure and Experience on Auditors' Decisions to Isolate Errors - Heather M. Hermanson
- Commentary by Jane Kennedy
- The Effects of Justification, Task Complexity and Experience/Training on Problem-Solving Performance - C. Janie ChanG, Joanna L. Y. Ho and Woody M. Liao
- Commentary by Marlys Gascho Lipe
- Auditors' Uncertainty Representation and Evidence Aggregation - Theodore J. Mock, Arnold M. Wright, Mary T. Washington and Ganesh Krishnamoorthy
- Commentary by Jane Kennedy
- Auditor Judgments: The Effects of the Partner's Views on Decision Outcomes and Cognitive Effort - Christine E. L. Tan, Christine A. Jubb and Keith A. Houghton
- Commentary by Karim Jamal
The Effects of Interference and Availability From Hypotheses
Generated by a Decision Aid Upon Analytical Procedures Judgments
John C. Anderson, Virginia Polytechnic Institute and State University
Steven E. Kaplan and Philip M. J. Reckers, Arizona State University
This study tests the influence (upon analytical procedures judgment) of having auditors focus on explanations from an error vs. non-error dominated list of explanations. The audit judgment studied was the probability of misstatement due to error or irregularity, based on an unexpected fluctuation in the inventory turnover ratio. A laboratory experiment was conducted using experienced audit seniors and managers, in varied client environments. As predicted by interference and availability theory, having auditors focus on errors from an error dominated list resulted in an increase in auditors' likelihood assessment of error. On the other hand, having auditors focus on non-errors from a non-error dominated list did not significantly decrease auditors' likelihood assessment of error. Results suggest that focusing auditor attention on externally generated errors can make error hypotheses more available and increase the subsequent likelihood assessment of error, and focusing auditor attention on externally generated non-errors does not significantly lower error availability.
The Relationship Between an Individual's Values and
Perceptions of Moral Intensity: An Empirical Study
Gail B. Wright, Charles P. Cullinan and Dennis M. Bline
Bryant College
The accountants' ethical decision-making process occurs in a contextually rich environment which includes the moral imperative of a particular issue (i.e., moral intensity), the values systems of moral agents, and professional influences such as the American Institute of Certified Public Accountants' Code of Professional Conduct. Jones (1991) theorized that issue characteristics, collectively called moral intensity, affect the agent's decision process. Weber (1993) suggests that values may also affect the agent's response to an ethical dilemma. This paper explores the relationship between a moral agent's values system and his or her perceptions of moral intensity. Results indicate that among issues of lower moral intensity, the accountant's values preferences influence perceptions of moral intensity. These results imply that differences in individuals' values preferences are most likely to influence the ethical decision-making process when dealing with issues for which there is a lower moral imperative.
Some Determinants of Analysts' Forecast Accuracy
Dipankar Ghosh, University of Oklahoma
Stacey M. Whitecotton, Arizona State University
Financial analysts often make predictions concerning annual earnings, and there is evidence to suggest that some provide more accurate forecasts than others. Despite their importance as both users of information and agents for its dissemination in financial markets, little is currently known about the factors which cause these differences in financial analysts' forecast accuracy. This study provides evidence on this issue by addressing three research questions. First, does ability affect performance in a financial forecasting task? If so, does the effect persist after controlling for experience? Finally, does a decision aid mitigate the effect of ability on earnings forecasting performance?
The results show that two measures of ability, perceptual ability and tolerance for ambiguity, were significantly related to earnings forecasting accuracy. Moreover, these effects were very persistent and not easily overcome by either experience or a decision aid. The decision aid was moderately successful at reducing the effect of tolerance for ambiguity, but not perceptual ability. Suggestions for future research and practical implications are discussed.
The Effects of Audit Structure and Experience
on Auditors' Decisions to Isolate Errors
Heather M. Hermanson, Kennesaw State University
This study examines the effect of audit firm structure, control risk and task-related experience on auditors' decisions to project sample errors to the population or to treat sample errors as isolated occurrences. One hundred forty-one practicing auditors from five Big 6 firms evaluated six error scenarios and indicated whether they would project or isolate each error. Results indicated that greater audit firm structure and task-related experience were associated with increased likelihood of projection. Control risk was not related to error projection. These results contribute to a growing body of research attempting to understand the auditor's judgment process in evaluating sample evidence.
The Effects of Justification, Task Complexity
and Experience/Training on Problem-Solving Performance
C. Janie Chang, California State University, San Marcos
Joanna L. Y. Ho, University of California, Irvine
Woody M. Liao, University of California
Accounting decision problems require decision makers to not only recognize decision rules but to also apply such decision rules to solve complex problems. This study examines the effects of justification conditions and individuals' general experience and training on problem-solving performance, and whether these effects are contingent on task complexity. Three hundred twelve subjects (145 MBA and 167 undergraduate business students) participated in a laboratory experiment. MBA and undergraduate students were treated as two different subject groups because of their differences in general experience and training. Subjects were randomly assigned to a justification or a no-justification condition and were asked to respond to two sets of three problems. The first set tested their understanding of three basic decision rules. The second set tested their application of the decision rules to solve three complex accounting problems. The results show that general experience and training significantly affected performance. Surprisingly, a justification requirement increased effort but did not significantly improve performance, regardless of task complexity.
Auditors' Uncertainty Representation and Evidence Aggregation
Theodore J. Mock, University of Southern California and University of Maastricht
Arnold M. Wright, Boston College
Mary T. Washington, Governors State University
Ganesh Krishnamoorthy, Boston College
Although probabilistic reasoning is an appropriate approach to consider uncertainty, prior research has found little evidence that auditors use explicit probabilistic reasoning processes. In this study, two Bayesian and one Classical judgment models are derived for a task where 12 auditors evaluated the likelihood of a material error. Evidence of use of these models comes from two sources: verbal protocols and comparisons with predictions based on the three models.
The protocol evidence indicates that seven subjects exhibit reasoning consistent with a Bayesian representation and five with a Classical Statistical representation. However, in aggregating the evidence, those employing a Bayesian representation were found to make risk judgments most consistent with a Classical model. By examining two phases of uncertainty evaluation, this study is able to isolate behavior in the representation phase from that in the aggregation phase. The results suggest a need for training or decision aids in the aggregation phase.
Auditor Judgments: The Effects of the Partner's
Views on Decision Outcomes and Cognitive Effort
Christine E. L. Tan, Christine A. Jubb and Keith A. Houghton
University of Melbourne
There are political, social and economic incentives embedded within the audit setting which provide stimuli for compliant behavior of subordinate auditors to that preferred by the superior auditor. This study examines this compliant behavior under conditions of accountability. Specifically, this study examines whether subordinate auditors, when they are held accountable for their decisions, align their views with those expressed by the evaluative audience;emtheir superiors. In addition, the degree of cognitive effort associated with this compliance is examined. An experiment involving 70 auditors from one Big 6 firm required the subjects to complete a preliminary risk assessment of inventory obsolescence for five separate inventory items. All auditors were informed that they might have to verbally justify their decision outcomes to the partner and/or the researchers. The risk assessments of the auditors' superior were manipulated. Generally, the risk assessments of the superior significantly influenced the subordinates' risk assessments and the amount of cognitive effort exerted by the subordinate, accountable auditors.
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
1996, Volume 8 Supplement
- America Online/On a Roll: A Case Study in Investigative Accounting - Abraham J. Briloff
- Ethics Research and Research Ethics - James C. Gaa
- Ethics and Accounting Research: The Issue of Truth - Karen L. Hooks and Joseph J. Schultz, Jr.
- Comments by Jack L. Krogstad
- An Analysis of Moral and Social Influences on Taxpayer Behavior - Dennis M. Hanno and George R. Violette
- Comments by Peggy A. Hite
- Personal and Organizational Culture Effects on Auditor Independence - Carolyn A. Windsor and Neal M. Ashkanasy
- An Evaluation of the Multidimensional Ethics Scale as a Measure of Ethical Sensitivity: Implications for Accounting Ethics Research - Jeffrey R. Cohen, Laurie W. Pant, and David J. Sharp
- Comments by Judy Tsui
- Ethics, Experience, and Professional Skepticism: A Situational Analysis - Michael K. Shaub and Janice E. Lawrence
- Comments by Mary S. Doucet and Thomas A. Doucet
- Experimental Evidence on Independence Impairment Conditions: Aggregate and Individual Results - Jeffrey W. Schatzberg, Galen R. Sevcik, and Brian Shapiro
- Comments by Jacob G. Birnberg
- Ethics and Environmental Auditing: A Comparison of the Levels of Moral Reasoning and Environmental Auditors and Public Accountants - Devaun Kite, Timothy J. Louwers, and Robin R. Radtke
- Comments by Paul Munter
- Experimental Investigation of Ethical Standards and Perceived Probability of Audit on Intentional Noncompliance - Dipankar Ghosh and Terry L. Crain
- Partner Behavior and Audit Quality Reduction Acts: Vies of Partners and Senior Managers - Joseph V. Carcello, Dana R. Hermanson, and H. Fenwick Huss
- Comments by Robert G. Ruland
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Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.
Ethics and Accounting Research: The Issue of Truth
Karen L. Hooks and Joseph J. Schultz, Jr.
Many accounting studies use a behavioral paradigm as their underpinning. Clearly, both internal and external validity are necessary to make a behavioral accounting study useful for application. Until recently, there has been little concern in the accounting literature for how deception of research participants affects these two necessary conditions for usefulness (Lord 1992; Dopuch 1992; Gibbins 1992).
This paper explains how we weighed the need for valid results against the ethical dilemma of using deception. In arriving at our decision to use deception, we review considerations about the importance of the research issue and the limited appropriate scientific methods available. We also review social science arguments that have been used to support the application of deceptive methods in other studies. By example, we show that two different scientific approaches resulted in completely different results. Notably, the actual behavior observed in the approach employing deception supported the theoretical hypothesis; the non-deception, opinion-based method did not.
We believe that an understanding of the assessments we mad in designing our study may be helpful to other researchers facing the same types of decisions. In addition, we hope our paper will stimulate discussion on appropriate and ethical procedures for research designs that include deception.
An Analysis of Moral and Social Influences on Taxpayer Behavior
Dennis M. Hanno and George R. Violette
Developing an integrative model of tax compliance behavior requires the identification of the underlying moral and social influences on taxpayers. In this study, a social psychological model is used to identify the salient beliefs that are related to tax compliance decisions. The model, the theory of reasoned action [Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980; and Ajzen, 1988], hypothesizes that a behavior can be predicted by the intention to perform the behavior, and that intention is influenced by personal evaluations and social pressures related to performing the behavior. The results indicate that both self-reported and hypothetical compliance behaviors were related to the intention to comply. In addition, compliance intentions were highly associated with beliefs relating to behavioral outcomes and normative perceptions. Specifically, differences in compliance intentions and behavior were traced to differences in beliefs about the importance of fulfilling personal moral and civic obligation.
Personal and Organizational Culture Effects on Auditor Independence
Carolyn A. Windsor and Neal M. Ashkanasy
Research has established that auditorsí moral reasoning development and just world beliefs influence their independence behavior when in conflict with client management. The present study extends these findings by investigating the relationships between organizational culture in Big 6 accounting firms and the two personal constructs identified in earlier work (Windsor and Ashkanasy 1995). Results supported hypotheses that personal constructs are related to organization culture values, although organizational culture dimensions did not separate auditors of differing independence decision-making style. Follow-up interviews with senior audit partners suggest that acculturation processes in accounting organizations result in aggressive and outcome-orientated values, which constrain the association between organizational culture and personal decision-making styles.
An Evaluation of the Multidimensional Ethics Scale as a Measure of Ethical Sensitivity: Implications for Accounting Ethics Research
Jeffrey R. Cohen, Laurie W. Pant, and David J. Sharp
This paper relates the multidimensional ethics scale and factor analysis method of Reidenbach and Robin (1990), Flory et al. (1992) and Cohen et al. (1993) to Restsís (1986) four-component model of ethical decision-making. We believe that the scale items and factor scores measure moral awareness, the first of Restís four components. Using a sample of Canadian auditing professionals, we demonstrate how the regression coefficient of ethical evaluation on these individual factor scores measures respondentsí ethical evaluation of the importance of various criteria, which corresponds to Restís second component (making a moral judgment), and that the importance and awareness measures differ. We believe that this measure of importance is related to moral development, and therefore could be related to the Defining Issues Test, (a commonly used measure of moral development in accounting ethics research). We suggest that these previously independent approaches to measuring individual morality could be integrated.
Ethics, Experience, and Professional Skepticism: A Situational Analysis
Michael K. Shaub and Janice E. Lawrence
A model of auditorsí professional skepticism is developed in this study by adapting Kee and Knoxís [1970] model of trust and suspicion to apply to auditors. This model defines professional skepticism as a function of (1) ethical disposition, (2) experience, and (3) situational factors. Structural equations modeling is used to evaluate the relationship of these factors to professional skepticism. The model is tested using auditors (n=156) from a single Big-6 firm. Each auditorís skepticism is measure and analyzed in nine different high(low)-risk situations. The results indicate auditors endorsing situation ethics are less skeptical and less concerned with professional ethics. CPAs exhibit less skeptical behavior than their uncertified colleagues. Situations increasing skepticism include the existence of (1) a related party transaction, (2) client financial stress, (3) prior client inaccuracies, and (4) poor client-auditor communication. Results also indicate auditorsí skepticism is counteracted when
Experimental Evidence on Independence Impairment Conditions: Aggregate and Individual Results
Jeffrey W. Schatzberg, Galen R. Sevcik, and Brian Shapiro
Auditor independence and ethical behavior are closely related, and both are influenced by economic incentives. This paper reports some exploratory results from experimental markets that investigate three general economic conditions that have been identified by the theoretical literature as necessary for an impairment of independence. Consistent with predictions, a lower frequency of independence impairment (auditor misreporting) was observed when any of the necessary conditions was absent than when all three conditions were present. However, some subjects maintained their independence even when all three necessary conditions were present, while other exhibited an impairment of independence in the absence of one or two of the three necessary conditions. These results document that the joint existence of all three conditions cannot be interpreted as strictly sufficient for an impairment of independence, and that each condition cannot be interpreted as strictly necessary. One possibility is that the varia
Ethics and Environmental Auditing: A Comparison of the Levels of Moral Reasoning and Environmental Auditors and Public Accountants
Devaun Kite, Timothy J. Louwers, and Robin R. Radtke
This exploratory study examines the differences in moral reasoning levels among environmental auditors, other internal auditors, and public accountants. It is posited that auditors with higher levels of moral reasoning (as measured by Restís (1979) Defining Issues Test) may self-select into environmental auditing assignments. Conversely, auditors with lower levels of moral reasoning may be assigned to environmental audits by the company to protect corporate interests. Fifty-two practicing environmental auditors (as well as 26 internal auditors) participated in the study by completing and returning the experimental survey and the Defining Issues Test (DIT). While results did not support the hypothesis that environmental auditors have higher mean scores on the DIT than other practicing accountants, further analysis revealed that auditors who requested an environmental auditing position had significantly higher DIT scores than those assigned to the position.
Experimental Investigation of Ethical Standards and Perceived Probability of Audit on Intentional Noncompliance
Dipankar Ghosh and Terry L. Crain
The experimental study presented here demonstrates that individual and situation factors are psychologically salient aspects in tax noncompliance. Specifically, a taxpayer who is more ethical or who perceives tax audit probability to be high will have lower intentional noncompliance, and vice-versa. However, these two variables partly moderate each otherís effect, with intentional noncompliance being particularly large when a taxpayer has low ethical standards and has low perceived tax audit probability. The results underline the suggestion of prior research to examine both direct and interaction effects of personality traits, like ethical standards, and environmental variables affecting economic gain from noncompliance, such as perceived probability of tax audit. The participants in this study were undergraduates majoring in business and all had in-class experience in preparing individual tax returns.
The research question and the design of the experiment in this research were very specific in their scope to avoid confounding the results. For example, the impact of other theoretical variables (such as risk preference of taxpayers, tax rates, and penalty rates) that affect compliance decisions was controlled for in the experiment. Ethical standards were measured using the Mach IV instrument. An attempt was made to separate intentional from unintentional noncompliance as they are separate constructs. Finally, audit probabilities were perceived by the taxpayer, in contrast to being objectively manipulated using too high and unrealistic numbers.
Partner Behavior and Audit Quality Reduction Acts: Vies of Partners and Senior Managers
Joseph V. Carcello, Dana R. Hermanson, and H. Fenwick Huss
Prior research on audit quality reduction acts has generally focused on non-managerial personnel in CPA firms. This study gathers perception data on the existence, extent, and possible factors associated with inappropriate partner behavior. A questionnaire addressing these issues was mailed to a national sample of senior managers and partners employed in auditing positions with public accounting firms.
A large majority of the respondents had never observed four of the five inappropriate behaviors examined. However, approximately 25 percent of respondents indicated that they had observed one or more instances of inadequate workpaper review. Two economic factors (large client size and the presence of a fixed-feel audit contract) were most strongly associated with GAAP and GAAS violations.
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
1994, Volume 6
- Auditor Attendance to Negative and Positive Information: The Effect of Experience-Related Differences, B. Anderson and M. Maletta
- The Effects of Audit Task on Evidence Integration and Belief Revision, D. Kerr and D. Ward
- Identification of Auditors' Propositions Related to Assessments of Management Estimates, G. Klersey
- The Effects of Independence Allegation on Peer Review Evaluation of Audit Procedures, J. King, R. Welker and G. Keller
- The Impact of Responsibility and Framing of Budgetary Information on Group-Shifts, R. Rutledge and A. Harrell
- Measuring Auditors' Reliance on Internal Auditors: A Test of Prior Scales and a New Proposal, A. Campbell
- Behavioral Determinants of Auditor Aggressiveness in Client Relations, J. Cohen, L. Pant and D. Sharp
- Role Ambiguity, Role Conflict, and Perceived Environmental Uncertainty: Are the Scales Measuring Separate Constructs for Accountants?, T. Gregson, J. Wendell and J. Aono
- The Effect of Experience on Consensus of Going-Concern Judgments, J. Ho
- Examination of Contextual Effects and Changes in Task Predictability on Auditor Calibration, R. Mladenovic and R. Simnett
- The Effect of an Anticipated Performance Evaluation on Willingness to Perform: The Intervention of Self-Presentational Motives, R. Palmer and R. Welker
This page was last updated on September 06, 2005 .
Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.
Auditor Attendance to Negative and Positive Information: The Effect of Experience-Related Differences
Brenda H. Anderson and Mario Maletta
The results indicate that experience plays a primary role in auditor attendance to negative audit evidence but does not affect attendance to positive information. Auditing students and staff auditors were found to attend to more negative evidence than audit seniors. This focus on negative data was further reflected in auditor control risk assessments in that auditing students rated control risk to be higher than audit seniors. The results indicate that the less experience auditors possess, the more they focus on negative information and the more negative they are in making audit judgments.
Return to BRIA 1994, Volume 6 Contents
The Effects of Audit Task on Evidence Integration and Belief Revision
David S. Kerr and D. Dewey Ward
This study found that the degree of nonadditivity in auditors' judgment processes is affected, in a predictable manner, by characteristics of the audit task. One implication of the results is that nonadditive, configural cue utilization by auditors may be more common than suggested by previous research. A second implication is that the effect of a given piece of audit evidence on auditors' judgments may depend on whether the audit task is an estimation-type or a evaluation-type task.
Return to BRIA 1994, Volume 6 Contents
Identification of Auditors' Propositions Related to Assessments of Management Estimates
George F. Klersey
Return to BRIA 1994, Volume 6 Contents
The Effects of Independence Allegation on Peer Review Evaluation of Audit Procedures
James King, Robert Welker and Gary Keller
Return to BRIA 1994, Volume 6 Contents
The Impact of Responsibility and Framing of Budgetary Information on Group-Shifts
Robert W. Rutledge and Adrian M. Harrell
Return to BRIA 1994, Volume 6 Contents
Measuring Auditors' Reliance on Internal Auditors: A Test of Prior Scales and a New Proposal
Annhenrie Campbell
Use of the work and/or personnel of a client's internal audit department in the annual independent audit is commonly termed "reliance." Reliance in experimental cases is often measured with a simple, ad hoc scale. This study examines whether auditors actually think of reliance activities in terms of a single scale of increasing values. The question is addressed by attempting to create a reliance scale from 52 subjects' paired comparison of seven reliance scenarios. A consistent scale resulted suggesting the subjects shared a common concept of reliance. The findings supported the use of Likert and interval scales of reliance in previous studies and provide an illustrated scale for future use.Return to BRIA 1994, Volume 6 Contents
Behavioral Determinants of Auditor Aggressiveness in Client Relations
Jeffrey Cohen, Laurie Pant and David Sharp
Comparisons were also conducted between more and less aggressive auditors on individual questions comprising attitude and subjective norm. For the attitude questions, differences emerged in respondents' perceptions of the likelihood that certain outcomes would occur if one is aggressive. In every case, more aggressive auditors believed that there was a greater (lesser) likelihood of positive (negative) outcomes as a result of aggressive behavior. Examining the individual subjective norm questions, differences occurred in respondents' perceptions of whether important referents, such as peers and business contacts, would approve of aggressiveness in client relations.
Return to BRIA 1994, Volume 6 Contents
Role Ambiguity, Role Conflict, and Perceived Environmental Uncertainty: Are the Scales Measuring Separate Constructs for Accountants?
Terry Gregson, John Wendell and June Aono
Return to BRIA 1994, Volume 6 Contents
The Effect of Experience on Consensus of Going-Concern Judgments
Joanna L. Ho
Return to BRIA 1994, Volume 6 Contents
Examination of Contextual Effects and Changes in Task Predictability on Auditor Calibration
Rosina Mladenovic and Roger Simnett
Return to BRIA 1994, Volume 6 Contents
The Effect of an Anticipated Performance Evaluation on Willingness to Perform: The Intervention of Self-Presentational Motives
Richard J. Palmer and Robert B. Welker
Return to BRIA 1994, Volume 6 Contents
Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section of the AAA
1992, Volume 4
- The Relative Effectiveness of Different Types of Feedback in Performance Evaluation, M. Hirst and P. Luckett
- Managerial Roles and Budgeting Behavior, N. Macintosh and J. Williams
- Alternative Pension Liability Disclosure and the Effect on Credit Evaluation: An Experiment, H. Sami and B. Schwartz
- A Multi-Attribute Investigation of Elicitation Techniques in Tests of Account Balances, M. Abdolmohammadi and A. Wright
- An Investigation of the Causal Ordering of Job Satisfaction and Organizational Commitment in Turnover Models in Accounting, T. Gregson
- The Analytic Hierarchy Process: An Empirical Examination of Aggregation and Hierarchical Structuring, R. Harper, Jr., N. Apostolou and B. Hartman
- Using an Unfolding Technique to Determine the Lowballing Tendency of Auditors, D. Marxen
- Accuracy and Consensus in Accounting Studies of Decision Making, D. Murray and R. Regel
- A Note on the Effect of Prior Probability Disclosure and Information Representativeness on Subject Predictive Accuracy, M. van Breda and K. Ferris
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This page was last updated on September 06, 2005 .
Please send comments on the ABO Website to ABO Section Webmaster Charles_Davis@baylor.edu.The Relative Effectiveness of Different Types of Feedback in Performance Evaluation
Mark K. Hirst and Peter F. Luckett
Managerial Roles and Budgeting Behavior
Norman B. Macintosh and John J. Williams
Alternative Pension Liability Disclosure and the Effect on Credit Evaluation: An Experiment
Heibatollah Sami and Bill N. Schwartz
A Multi-Attribute Investigation of Elicitation Techniques in Tests of Account Balances
Mohammad J. Abdolmohammadi and Arnold Wright
An Investigation of the Causal Ordering of Job Satisfaction and Organizational Commitment in Turnover Models in Accounting
Terry Gregson
The Analytic Hierarchy Process: An Empirical Examination of Aggregation and Hierarchical Structuring
Robert M. Harper, Jr., Nicholas G. Apostolou and Bart P. Hartman
Using an Unfolding Technique to Determine the Lowballing Tendency of Auditors
Dale E. Marxen
Accuracy and Consensus in Accounting Studies of Decision Making
Dennis Murray and Roy W. Regel
A Note on the Effect of Prior Probability Disclosure and Information Representativeness on Subject Predictive Accuracy
Michael F. van Breda and Kenneth R. Ferris
One stream of Human Information Processing research has focused on the utility of accounting information, particularly financial ratios, for subject prediction-making, usually of corporate failure. Several methodological controversies have surrounded this research involving the effects of prior probability disclosure and information representativeness on subjects' predictive accuracy. This research note attempts to provide additional evidence on these issues.
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Behavioral Research in Accounting
A journal of the Accounting, Behavior, and Organizations Section of the American Accounting Association
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