IDEAS home Printed from https://ideas.repec.org/a/aud/audfin/v18y2020i159p532.html
   My bibliography  Save this article

Does Identification with the Firm and Profession Mitigate Outcome Effect on Auditors’ Decisions?

Author

Listed:
  • Anna J. JOHNSON-SNYDER

    (East Carolina University, U.S.A.)

  • Brenda L. KILLINGSWORTH

    (East Carolina University, U.S.A.)

Abstract

The paper examines whether auditors’ identification with the organization or with the profession will influence the use of outcome knowledge when reviewing audits. In addition, the study examines whether the conflict between organizational identity and professional identity influences evaluators’ use of outcome knowledge. The study participants consisted of 63 auditing experts in managerial ranks. Auditors completed an instrument containing randomized audit review scenarios developed to evaluate the effects of identification and outcome knowledge on decisions. Results showed that organizational identification can minimize the effect of outcome knowledge on decisions while professional identification results in an increase in biases.

Suggested Citation

  • Anna J. JOHNSON-SNYDER & Brenda L. KILLINGSWORTH, 2020. "Does Identification with the Firm and Profession Mitigate Outcome Effect on Auditors’ Decisions?," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 18(159), pages 532-532.
    • Handle: RePEc:aud:audfin:v:18:y:2020:i:159:p:532
    as

    Download full text from publisher

    File URL: http://revista.cafr.ro/temp/Article_9645.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jennings, Marianne M. & Lowe, D. Jordan & Reckers, Philip M. J., 1998. "Causality as an influence on hindsight bias: An empirical examination of judges' evaluation of professional audit judgment," Journal of Accounting and Public Policy, Elsevier, vol. 17(2), pages 143-167.
    2. Herda, David N. & Lavelle, James J., 2011. "The effects of organizational fairness and commitment on the extent of benefits big four alumni provide their former firm," Accounting, Organizations and Society, Elsevier, vol. 36(3), pages 156-166, April.
    3. Mark E. Peecher & M. David Piercey, 2008. "Judging Audit Quality in Light of Adverse Outcomes: Evidence of Outcome Bias and Reverse Outcome Bias," Contemporary Accounting Research, John Wiley & Sons, vol. 25(1), pages 243-274, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Goodson, Brian M. & Grenier, Jonathan H. & Maksymov, Eldar, 2023. "When law students think like audit litigation attorneys: Implications for experimental research," Accounting, Organizations and Society, Elsevier, vol. 104(C).
    2. Brown, Timothy & Majors, Tracie M. & Peecher, Mark E., 2020. "Evidence on how different interventions affect juror assessment of auditor legal culpability and responsibility for damages after auditor failure to detect fraud," Accounting, Organizations and Society, Elsevier, vol. 87(C).
    3. Peecher, Mark E. & Solomon, Ira & Trotman, Ken T., 2013. "An accountability framework for financial statement auditors and related research questions," Accounting, Organizations and Society, Elsevier, vol. 38(8), pages 596-620.
    4. Chambers, Valerie A. & Reckers, Philip M.J., 2022. "Auditor interventions that reduce auditor liability judgments," Advances in accounting, Elsevier, vol. 58(C).
    5. Charron, Kimberly F. & Lowe, D. Jordan, 2008. "An examination of the influence of surprise on judges and jurors’ outcome effects," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 19(7), pages 1020-1033.
    6. Butler, Stephen A. & Ghosh, Dipankar, 2015. "Individual differences in managerial accounting judgments and decision making," The British Accounting Review, Elsevier, vol. 47(1), pages 33-45.
    7. Păcuraru-Ionescu Cătălin-Paul & Cîmpan Marius & Borlea Sorin Nicolae, 2023. "Determinants of Audit Quality and Connections with Economic Development and Education," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 741-751, July.
    8. Maria Kostritsa & Inken Sittler, 2017. "The Impact of Social Norms, Trust, and Fairness on Voluntary Tax Compliance in Austria," Management, University of Primorska, Faculty of Management Koper, vol. 12(4), pages 333-353.
    9. Jimenez, Peggy & Iyer, Govind S., 2016. "Tax compliance in a social setting: The influence of social norms, trust in government, and perceived fairness on taxpayer compliance," Advances in accounting, Elsevier, vol. 34(C), pages 17-26.
    10. Jochen Bigus, 2015. "Loss Aversion, Audit Risk Judgments, and Auditor Liability," European Accounting Review, Taylor & Francis Journals, vol. 24(3), pages 581-606, September.
    11. Dan Dacian Cuzdriorean, 2013. "Most Recent Findings In Earnings Management Area: Interesting Insights From Traditionally Top 5 Leading Accounting Journals," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(15), pages 1-5.
    12. Mertins, Lasse & Salbador, Debra & Long, James H., 2013. "The outcome effect – A review and implications for future research," Journal of Accounting Literature, Elsevier, vol. 31(1), pages 2-30.
    13. Christine Gimbar & Molly Mercer, 2021. "Do Auditors Accurately Predict Litigation and Reputation Consequences of Inaccurate Accounting Estimates?," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 276-301, March.
    14. Chambers, Valerie A. & Reckers, Philip M.J. & Reinstein, Alan, 2020. "Drivers of juror's malpractice assessments in auditor litigation involving offshoring and overtime: Generation and a management Mindset," Advances in accounting, Elsevier, vol. 50(C).
    15. William D. Brink & Jonathan H. Grenier & Jonathan S. Pyzoha & Andrew Reffett, 2019. "The Effects of Clawbacks on Auditors’ Propensity to Propose Restatements and Risk Assessments," Journal of Business Ethics, Springer, vol. 158(2), pages 313-332, August.
    16. Piercey, M. David, 2009. "Motivated reasoning and verbal vs. numerical probability assessment: Evidence from an accounting context," Organizational Behavior and Human Decision Processes, Elsevier, vol. 108(2), pages 330-341, March.
    17. Rashid, Abdul & Ghazi, Muhammad Saarim, 2021. "Factors affecting Sharī‘ah audit quality in Islamic banking institutions of Pakistan: a theoretical framework," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 28, pages 124-140.
    18. Daoust, Laurence & Malsch, Bertrand, 2019. "How ex-auditors remember their past: The transformation of audit experience into cultural memory," Accounting, Organizations and Society, Elsevier, vol. 77(C), pages 1-1.
    19. Zhang, Yuqian & De Zoysa, Anura & Cortese, Corinne, 2023. "Foreign language effect in accounting uncertainty expressions: Interpretation and probabilistic estimation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    20. Van Landuyt, Ben W., 2021. "Does emphasizing management bias decrease auditors’ sensitivity to measurement imprecision?," Accounting, Organizations and Society, Elsevier, vol. 88(C).

    More about this item

    Keywords

    auditor judgement; organizational identification; professional identification; organizational-professional conflict; outcome knowledge; audit;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aud:audfin:v:18:y:2020:i:159:p:532. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dumitru Valentin Florentin (email available below). General contact details of provider: http://revista.cafr.ro/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.