1993 Outstanding ABO Dissertation

Debiasing Audit Judgment with Accountability

By S. Jane Kennedy, PhD, University of Washington - Seattle

Principal Advisor: Robert Ashton, Duke University

This research examines the effect of accountability, defined as the requirement to justify one's judgments to others, on two judgment biases -- recency and the curse of knowledge. Audit judgment research documents the presence of each of these biases in the absence of accountability. However, accountability is an important element of the auditing environment, and research in psychology shows that accountability motivates cognitive effort. An important question is whether the additional cognitive effort induced by accountability is sufficient to overcome auditors' information processing biases.

I propose the following causal framework for predicting the effectiveness of accountability in mitigating judgment biases. Strategic biases are the result of conscious cost/benefit tradeoffs between cognitive effort and benefits such as accuracy, the speed of decision-making, and the decision's justifiability. Accountability alters the benefits associated with cognitive effort such that strategic biases may be eliminated or markedly reduced. In contrast, data-related biases are caused by the way internal or external data is used by the decision maker rather than insufficient attention or effort. Since accountability does not alter the decision maker's knowledge, memory, or information set, accountability is unlikely to prevent or mitigate data-related biases. Experiments testing the predictions of this framework -- accountability's effectiveness with recency (a strategic bias) and ineffectiveness with the curse of knowledge (a data-related bias) -- provide support. Recency was eliminated by accountability when tested with MBA students and did not exist among professional auditors. I conjecture that the lack of recency among auditors is due to carryover effects from their accountability-inducing environment. The curse of knowledge was not mitigated by accountability, whether the subjects were MBA students or auditors.

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