The ABO Reporter


By John T. Rigsby
Mississippi State University

I would appreciate hearing from any section members with suggestions for papers you feel would be of interest to others and that should be included in this column in the future. Please send any citations to me at

Ashton R. H., “A Review and Analysis of Research on the Test-Retest Reliability of Professional Judgment,” Journal of Behavioral Decision Making (2000, Vol. 13, No. 3): pp. 277-294.

The author analyzes existing research on the test-retest reliability of human judgment, i.e., the extent to which a judge makes identical judgments when presented with identical stimuli on two occasions, looking at both internal consistency and temporal stability. He finds most of the literature concentrated in four areas of study, with extreme variability in research approach/design and in the quality of the execution and analysis, and with mean test–retest reliability differing across both substantive judgment areas and the internal consistency vs. temporal stability distinction. He concludes that our knowledge of this fundamental property of human judgment is quite meager.

Beasley, M. S., J. V. Carcello, D. R. Hermanson, and P. D. Lapides, “Fraudulent Financial Reporting: Considerations of Industrial Traits and Corporate Governance Mechanisms,” Accounting Horizons (2000, Vol. 14, No. 4): pp. 441-454.

The authors examine financial statement fraud instances investigated during the late 1980s through the 1990s within three industries, and find sample fraud companies had very weak governance mechanisms relative to no-fraud industry benchmarks and indicate differences that they found in governance mechanisms across the industries.

Bonner, S. E., R. Hastie, G. Sprinkle, and S. M. Young, “A Review of the Effects of Financial Incentives on Performance in Laboratory Tasks: Implications for Management Accounting,” Journal of Management Accounting (2000, Vol. 12): pp. 19-64.

The authors present an extensive review of laboratory studies on financial incentives and examine the relations between type of task and type of incentive scheme, respectively, and task performance. Their review found that incentives improve performance in only about half of the experiments, and as tasks became more cognitively complex, it was less likely that incentives improve performance.

Caster, P., D. Massey, and A. Wright, “Research on the Nature, Characteristics, and Causes of Accounting Errors: The Need for a Multi-Method Approach,” Journal of Accounting Literature (2000, Vol. 19): pp. 60-93.

The authors seek to provide further understanding of the divergent findings in the “error studies” area by developing a model of the error generation and detection processes and reviewing the prior literature within that framework. They identify variables in the model that have been explored, those variables needing further exploration, and possible avenues for future research.

Choo, F., and M. D. Curtis, “Structural Assessments in Accounting Research,” Journal of Accounting Literature (2000, Vol. 19): pp. 131-157.

In this review of the literature the authors explain and contrast the various approaches to knowledge structure elicitation and analysis in order to facilitate the selection and use of appropriate structural assessment techniques in accounting research. The techniques are described and categorized, and those accounting studies which have employed structural assessment for purposes of evaluating the nature of accountant knowledge structure or for exploring the relationship between antecedents (e.g., education and experience) and consequences (e.g., performance) are discussed.

Chow, C. W., F. J. Deng, and J. L. Ho, “The Openness of Knowledge Sharing Within Organizations: A Comparative Study of the United States and the People’s Republic of China,” Journal of Management Accounting Systems (2000, Vol. 12): pp. 65-95.

The authors examine the interaction effects of national culture and contextual factors on employees’ tendency to share knowledge with coworkers between managers in the United States and China. They found that openness of knowledge sharing was related to differences in degree of collectivism, as well as whether knowledge sharing involved a conflict between self and collective interests.

Chow, C. W., R. N. Hwang, and W. Liao, “Motivating Truthful Upward Communication of Private Information: An Experimental Study of Mechanisms From Practice and Theory,” ABACUS (2000, Vol. 36, No. 2): pp. 160-179.

The authors examine incentive-compatible control mechanisms and perform a laboratory experiment testing subordinate’s misrepresentation. Results indicate that none of the mechanisms tested were able to eradicate subordinate misrepresentations and the profit losses that they induced, suggesting a possible explanation for the analytically derived mechanisms’ lack of real-world adoption.

Cohen, J. R., G. Krishnamoorthy, and A. M. Wright, “Evidence on the Effect of Financial and Nonfinancial Trends on Analytical Review,” AUDITING: A Journal of Practice & Theory, (2000, Vol. 19, No. 1): pp. 27-48.

The authors examine the relative consideration of financial and nonfinancial trends in two analytic review tasks: establishing the level of audit scope and generating hypotheses. They found that auditors place heavier reliance on financial trends than nonfinancial trends in establishing the overall level of audit scope, apparently utilizing nonfinancial information as corroborating evidence. In addition, a large and essentially equal number of hypotheses were generated when either financial or nonfinancial trends indicated a decline, suggesting that auditors consider nonfinancial information in the hypotheses–generation stage of the analytical review process.

Cuccia, A. D. and G. A. McGill, “The Role of Decision Strategies in Understanding Professionals Susceptibility to Judgment Biases,” Journal of Accounting Research (2000, Vol. 38, No. 2): pp. 419-435.

The authors examine whether professionals’ ability to structure a judgment task affects the predictions of the belief-adjustment model. They conducted two experiments with tax professionals and their results suggest that recency was dependent on the interaction of control over the judgment task and the decision context. Recency was observed only when the subjects had no context-relevant knowledge or experience or were prevented from structuring the task to facilitate its use.

Davis, E. B., S. J. Kennedy, and L. A. Maines, “The Relation between Consensus and Accuracy in Low-to-Moderate Accuracy Tasks: An Auditing Example,” AUDITING: A Journal of Practice & Theory (2000, Vol. 19, No. 1): pp. 101-123.

The authors examine the relation between consensus and accuracy using an error frequency estimation task for which auditors’ overall accuracy is known to be low to moderate. They find that accuracy is positively related to consensus for all auditors in manufacturing and for auditors with more than 12 (36) months of experience in natural resources (banking), with use of a heuristic by auditors with little experience in the latter two industries leading to consensus among auditors, but low accuracy.

Erickson, M., B. W. Mayhew, and W. L. Felix, “Why Do Audits Fail? Evidence From Lincoln Savings and Loan,” Journal of Accounting Research(2000, Vol. 38, No. 1): pp. 165-194.

The authors describe and critique the audit procedures applied to a set of material transactions from Lincoln Savings and Loan (LSL) audit failure. Auditor deposition testimony and audit working papers produced in the civil litigation against the auditors of LSL provide the basis for this analysis. The authors find that the auditor’s failure to obtain and use knowledge of LSL’s business was one of the most significant shortcomings in the LSL audit. Also there was too much reliance on mechanical aspects in gathering evidence, and not enough analyzing of the substance of the transactions.

Fogarty, T. J., and L. P. Kalbers, “An Empirical Evaluation of Interpersonal and Organizational Correlates of Professionalism in Internal Auditing,” Accounting and Business Research (2000, Vol. 30, No. 2): pp. 125-136.

The authors examine the existence of professional attitudes in internal auditors and identify their association with interpersonal and organizational conditions of internal auditing. They hypothesize that job characteristics would be negatively associated with role stress and positively related to professionalism, with role stress negatively associated with professionalism. Their results indicate that a complex set of work design factors have selective importance for creating and maintaining professional attitudes and behaviors of internal auditors.

Frank, K. E., R. K. Hanson, and D. J. Lowe, “CPAs’ Perceptions of the Emerging Multidisciplinary Accounting/Legal Practice,” Accounting Horizons (2001, Vol. 15, No. 1): pp. 36-48.

The authors use a survey to gather evidence on the existence of multidisciplinary practice (MDP) in the public accounting profession. They find that public accounting firms already offer a number of legal services to their clients and are interested in increasing the offering of these services if allowed. Their findings also indicate that the size of the public accounting firms likely influences the types of legal services offered and the arrangements used to deliver the legal services to clients.

Haka, S. F., J. L. Luft, and B. Ballou, “Second-Order Uncertainty in Accounting Information and Bilateral Bargaining Costs,” Journal of Management Accounting Research (2000, Vol. 12): pp. 115-139.

The authors examine two types of uncertainty: first-order (uncertainty about outcomes) and second-order (uncertainty about the probability distribution of outcomes). They find at a moderately high level of first-order uncertainty, that an accounting information system that lowers second-order uncertainty halves the time bargainers need to reach agreement and decreases the premium paid for bearing increased risk by 43 percent. These results can help explain the choices firms make in designing and operating their accounting information systems.

Higgins, M. C., and K. Kram, “Reconceptionalizing Mentoring at Work: A Developmental Network Perspective,” The Academy of Management Review (2001, Vol. 26, No. 2): pp. 264-288.

The authors introduce social networks theory and methods as a way of understanding mentoring in the current career context. They first discuss a typology of “developmental networks” using core concepts from social networks theory, to view mentoring as a multiple relationship phenomenon, and then propose a framework illustrating factors that shape developmental network structures and offer propositions focusing on the development consequences for individuals having different types of developmental networks in their careers. Finally, the authors propose strategies for testing their propositions and for researching multiple developmental relationships further.

Hodder, L., L. Koonce, and M. L. McAnally, “SEC Market Risk Disclosures: Implications for Judgment and Decision Making” Accounting Horizons (2001, Vol. 15, No. 1):pp. 49-70.

The authors draw on research in the judgment and decision making arena to identify and analyze the behavioral implications of the new risk disclosures in the SEC’s Financial Reporting Release No. 48, and offer three conclusions: (1) users of FRR No. 48 may have more complex evaluations of risk than anticipated by the SEC; (2) firms’ flexibility in FRR No. 48 will adversely affect users’ risk judgments; (3) inappropriate risk assessments may result from the lack of certain qualitative disclosures in FRR No. 48.

Kadous, K., “The Effects of Audit Quality and Consequence Severity on Juror Evaluations of Auditor Responsibility for Plaintiff Losses,” The Accounting Review (2000, Vol. 75, No. 3): pp. 327-341.

The author investigates whether providing higher quality audits increases auditor’s chances of avoiding legal liability. The results indicate that jurors were affected by the ex post observance of audit failure, resulting in higher standards of care when the consequences of audit failure were more severe. Providing higher quality audits were useful when audit failure led to only moderate negative consequences, but were ignored when audit failure led to severe consequences.

Kaplan, S. E., J. H. Reneau, and S. Whitecotton, “The Effects of Predictive Ability Information, Locus of Control, and Decision Maker Involvement on Decision Aid Reliance,” Journal of Behavioral Decision Making (2001, Vol. 14, No. 1): pp. 35-50.

The authors examine several factors that influence decision makers’ willingness to rely on mechanical decision aids. In the first experiment, they find that decision makers were more likely to rely on a decision aid when its predictive ability was not disclosed, and those with an external locus of control relied more on decision aids than those with an internal locus of control. In the second experiment, the authors find that involving decision makers in the development of the aid enhanced reliance, and that those with an internal locus of control were more strongly influenced by this form of involvement than those with an external locus of control.

Lord, A. T., and F. T. DeZoort, “The Impact of Commitment and Moral Reasoning on Auditors’ Responses to Social Influence Pressure,” Accounting Organization and Society (2001, Vol. 26, No. 3): pp. 215-235.

The authors report the results of an experiment examining whether social influence pressures within the accounting firm affect auditor’s willingness to sign off on financial statements that are materially misstated. They also examine the effects of organizational commitment, professional commitment, and moral development. They find that obedience pressure significantly increased auditors’ willingness to sign-off on an account balance that was materially misstated, although conformity pressure did not. Their findings also support the predicted effects for organizational commitment, but not those for professional commitment and moral development.

Messier, W. F. and L. A. Austen, “Interest Risk and Control Risk Assessments: Evidence on the Effect of Pervasive and Specific Risk Factors,” AUDITING: A Journal of Practice & Theory (2000, Vol. 19, No. 2): pp. 119-131.

The authors examine the effect of pervasive and specific risk factors on auditors’ inherent risk and control risk assessments in an experimental setting, and found that both were significant to auditors’ IR and CR assessments and a positive association between auditors’ IR and CR assessments. The findings are consistent with Waller’s (1993) notion of a knowledge-based dependency between IR and IC assessments.

Newman, D. P., E. Patterson, and R. Smith, “The Influence of Potentially Fraudulent Reports on Audit Risk Assessment and Planning,” The Accounting Review (2001, Vol. 76, No. 1): pp. 59-80.

The authors examine the dynamic interaction between the auditor and auditee and consider how the auditor assesses the risk of fraudulent financial reporting and plans the audit where a possibly fraudulent auditee anticipates that assessment and the planning process. The authors find that because of this dynamic interaction, audit procedures that aid in assessing audit risk may not reduce that risk or result in more efficient audits.

Nieschwietz, R., J. Schultz, and M. Zimbelman, “Empirical Research on External Auditors’ Detection of Financial Statement Fraud,” Journal of Accounting Literature (2000, Vol. 19): pp. 190-246.

The authors review empirical accounting research related to external auditor’s detection of fraudulent financial reporting. Their review summarizes empirical evidence and synthesizes the empirical findings to provide a foundation for future researchers’ and practitioners’ attempts to improve the detection of fraud by auditors through highlighting common threads in the findings and pointing new directions for research.

Smith, J. R., S. L. Tiras, and S. S. Vichitlekarn, “The Interaction Between Internal Control Assessment and Substantive Testing in Audits for Fraud,” Contemporary Accounting Research (2000 Vol. 17, No. 2): pp. 327-356.

The authors examine the interaction between internal control assessments and substantive testing in fraud detection using a two-stage model of the auditor-manager interaction in which the auditor assesses the “likelihood” or possibility of fraud in the first state and conducts substantive tests in the second stage. They found that the probability of undetected fraud remained the same, regardless of the auditor’s allocation, though the allocation of some audit resources to internal control assessments may provide cost savings to the auditor.

Viator, R. , “The Association of Formal and Informal Public Accounting Mentoring with Role Stress and Related Job Outcomes,” Accounting Organizations and Society (2001, Vol. 26, No. 1): pp. 73-93.

The author examines the association between mentoring (both formal and informal) and three measures of role stress (role conflict, role ambiguity, and perceived environmental uncertainty) and two job outcomes (job performance and turnover intentions) based on structural equation modeling. The results support the usefulness of informal mentors in providing career development and psychosocial support functions, but limited positive effects related to formally assigned mentors.

Wright, A., and J. C. Bedard, “Decision Processes in Audit Evidential Planning: A Multistage Investigation,” AUDITING: A Journal of Practice & Theory (2000, Vol. 19, No. 1): pp. 123-143.

The authors report the results of a verbal protocol study designed to assess how variation in inherent-risk factors affects auditors’ decision processes throughout audit planning. They found that client risk factors have pervasive effects throughout planning, though risk factors were not associated with difference in extent of testing or with justification of extent decisions.

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