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Abstract Views: 217
Downloads: 64
Download Rank: 17171
MICHAEL FAVERE-MARCHESI
Simon Fraser University - Accounting Area
KAREN S. PINCUS
University of Arkansas at Fayetteville - Sam M. Walton College of Business
Abstract:
Previous research on auditors' processing of nondiagnostic evidence has demonstrated the existence of a dilution effect – the tendency to underreact to diagnostic information when accompanied by nondiagnostic information. While prior studies hypothesized that accountability, a prominent feature in audit settings, might mitigate against the dilution effect, results have generally been nonsignificant or counter to expectations. This study extends that line of research, exploring two hypotheses based on more recent psychology theories about accountability: (1) accountability reduces the frequency of the dilution effect, a decision quality benefit, but (2) when a dilution effect occurs, the magnitude will be greater for accountable subjects, a decision quality cost. The experimental results from a sample of 192 internal auditor subjects provide evidence supporting these hypotheses. In addition, we hypothesized that as the level of accountability increases, the frequency and magnitude effects are amplified. Our results related to accountability levels (operationalized by internal auditor justification to either top management or the audit committee of the board of directors) were not significant. Implications of these findings for audit research and practice are discussed.
Keywords: Nondiagnostic evidence, Dilution effect, Accountability
JEL Classifications: M49, C91
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Abstract has been viewed 217 times
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Contact Information for MICHAEL FAVERE-MARCHESI (Contact Author)
Email address for MICHAEL FAVERE-MARCHESI
Simon Fraser University - Accounting Area
Burnaby ,British Columbia V5A 1S6
Canada
604-291-4745 (Phone)
604-291-4920 (Fax)
Contact Information for KAREN S. PINCUS
Email address for KAREN S. PINCUS
University of Arkansas at Fayetteville - Sam M. Walton College of Business
Fayetteville , AR 72701
United States
479-575-6119 (Phone)
479-575-2863 (Fax)
Suggested Citation
Favere-Marchesi, Michael and Pincus, Karen S., "The Impact of Accountability on Auditors' Processing of Nondiagnostic Evidence" (March 2003). http://ssrn.com/abstract=392201
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Format Type |
Number of |
Date Posted |
File Size |
Est. download time |
File name |
|---|---|---|---|---|---|
Acrobat File |
64 |
May 21, 2003 |
184K | 1.54 minutes |
SSRN_ID392201_code030507500.pdf |
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