1993, Volume 5
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Opportunities in Behavioral Accounting
Research, M. Bamber
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The Effects of Information Availability and
Cost on Investment Strategy Selection: An Experiment, R. Bricker and
M. DeBruine
-
The Outcome Effect in Performance Evaluation:
Decision Process Observability and Consensus, J. Fisher and T. Selling
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Auditors' Causal Probability Judgments in Analytical
Procedures for Audit Planning, J. Ho and R. May
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An Examination of the Effects of Accountability
Tactics on Performance Evaluation Judgments in Public Accounting, S.
Kaplan and P. Reckers
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The Effects of Fraud Signals, Evidence Order,
and Group-Assisted Counsel on Independent Auditor Judgment, P. Reckers
and J. Schultz, Jr.
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The Effects of Auditors' Ethical Orientation on
Commitment and Ethical Sensitivity, M. Shaub, D. Finn and P. Munter
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The Role of Post Completion Audits, Managerial
Learning, Environmental Uncertainty and Performance, R. Chenhall and
D. Morris
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A Capital Budgeting Case Study: An Analysis of
a Choice Process and Roles of Information, M. Hirst and J. Baxter
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Incorporating Statistical Power into the
Test of Significance Procedure: A Methodological and Empirical Inquiry,
M. Lindsay
-
Confidence and Information Usage: Evidence
from a Bankruptcy Prediction Task, T. Selling
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Opportunities in Behavioral Accounting
Research
E. Michael Bamber
Given the explosion in behavioral accounting research over the last 15
years, the purpose of this paper is to provide an overview of current behavioral
accounting research opportunities. The paper addresses three questions:
What is getting published and where is it getting published? What research
questions are generating the most interest in the subfields of accounting
information systems, auditing, financial accounting, managerial accounting,
and taxation? What are the generally accepted findings of this research
opportunities? Particular attention is given to research methods and findings
that may transfer across accounting subfields. Research opportunities are
discussed first in terms of accounting subfields, and then in terms of
three broad themes: (1) knowledge and expertise, (2) technology and decision
aids, and (3) group processes, organizational choice and culture.
Return to BRIA 1993, Volume 5 Contents
The Effects of Information Availability and
Cost on Investment Strategy Selection: An Experiment
Robert Bricker and Marinus DeBruine
Using a computer-based set of experiments, this study explores the relationship
between information cost and availability, and the investment strategy
selections of subject-investors. Hypotheses about price-taking, risk-averse
investors' preferences for costly financial information-seeking investment
strategies are tested. The results showed that subjects exchanged expected
return for reasonably costly financial information that reduced investment
portfolio risk. However, uneconomical information had the effect of decreasing
the frequency of information seeking strategies and increasing the frequency
of both riskier and riskless strategies that did not require information
acquisition. The level of investment activity in the experimental securities
market was also found to be sensitive to the cost and availability level
of information. These results confirm the importance of reasonably priced
information for a securities market, and suggest that costly or unavailable
information about securities' risk may inhibit capital formation. Within
a financial reporting scenario, the results also address the importance
of considering investor risk preferences in regulatory decisions concerning
the provision of financial information.
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The Outcome Effect in Performance Evaluation:
Decision Process Observability and Consensus
Joseph
Fisher and Thomas I. Selling
The potential effects of outcome knowledge on performance appraisal are
examined using a bankruptcy prediction task.. Independent variables are
outcome knowledge, observability of evaluatee's decision processes, and
evaluator-evaluatee-outcome agreement. Study of evaluatee's decision process
was motivated by results in agency and control theories, whereas evaluator-evaluatee-outcome
agreement has not yet been addressed by researchers studying performance
evaluation. Results show that (1) evaluator-evaluatee-outcome agreement
interacts with outcome knowledge in affecting performance evaluation, and
(2) observability of decision process mitigates the outcome effect.
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Auditors' Causal Probability Judgments in Analytical
Procedures for Audit Planning
Joanna L. Ho and Robert G. May
This study examines auditors' probability judgments in an analytical-planning
context. The conjunction rule for probabilities is used as a benchmark
for examining the effects of extremity of an unexpected fluctuation in
a financial ratio, plausibility of causes, audit implications of causes,
and experience-related knowledge on auditors' probability judgments about
the possible causes of a fluctuation in the gross margin ratio. One hundred
and sixteen practicing auditors with average experience of 3.2 years were
provided with a four-year trend including a current observation of a key
financial ratio of a hypothetical client-firm and its industry. Results
indicate that auditors violated the conjunction rule more often when the
fluctuation was more extreme. The auditors apparently were influenced by
an interaction between the audit implications and plausibilities of the
possible causes, but not by them separately. Students, lacking knowledge
of the relationships between the gross margin ratio and the underlying
causes, were affected only by the audit implications.
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An Examination of the Effects of Accountability
Tactics on Performance Evaluation Judgments in Public Accounting
Steven E. Kaplan and Philip M. J. Reckers
Limited attention has been given to examining how performance evaluators
make decisions about a subordinate's behavior. This study, grounded in
attribution theory, examines the effects of a subordinate's explanation
(accountability tactics) for substandard performance on evaluation judgments.
Using data from a laboratory experiment involving 88 experienced audit
professionals, a subordinate's use of accountability tactics was hypothesized
to interact with available client and subordinate information when auditors'
form causal attributions. Contrary to expectation, accountability tactics
were found to have a significant main effect only. Causal attributions,
in turn, were found to influence both the subjects' end-of-job performance
ratings and their tendency to work with a subordinate on future assignments.
Return
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The Effects of Fraud Signals, Evidence Order,
and Group-Assisted Counsel on Independent Auditor Judgment
Philip M. J. Reckers and Joseph J. Schultz, Jr.
Recently, the prevention, detection and reporting of fraud has drawn substantial
attention. The Record of the National Commission on Fraudulent Financial
Reporting [1987], the nine "expectation gap" Statements on Auditing Standards
[AICPA, 1988], and ongoing Congressional hearings by Congressmen Dingell,
Gonzales and others focus attention on huge reported losses from alleged
corporate fraud. Extension of group information-processing procedures in
auditing has been suggested as a potential means to achieve higher quality
audits. This paper reports the findings of an experimental study examining
individual and group-assisted audit judgments of 99 Big 6 audit seniors
under varying levels of fraud. In addition, the paper addresses the influence
of group assistance on the recent order effect common to many audit studies.
Group assistance was found to result in judgments with greater adherence
to the guidance present in professional standards, whereas order effects
were found to persist for auditors in the low, but not high, fraud condition.
Return
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The Effects of Auditors' Ethical Orientation
on Commitment and Ethical Sensitivity
Michael K. Shaub, Don W. Finn and Paul
Munter
A significant body of research has demonstrated that ethical judgments
are a function of individuals' ethical perceptions, or sensitivity. Little
research, however, has been conducted to examine ethical sensitivity, and
none has examined this sensitivity among auditors. This study used a path
analytic approach to examine the ethical orientation, commitment, and ethical
sensitivity of 207 auditors in a Big Six firm. Auditors' ethical orientations
were found to influence not only their ethical sensitivity, but also their
organizational and professional commitment. The results indicate that relativistic
auditors were less likely to recognize ethical issues in an auditing scenario
and were less committed to the firm and the profession than nonrelativists.
Idealism was associated with a higher level of professional commitment,
but with a reduced level of ethical sensitivity. Higher levels of commitment,
however, did not result in more ethically sensitive auditors.
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The Role of Post Completion Audits, Managerial
Learning, Environmental Uncertainty and Performance
Robert H. Chenhall and Deigan Morris
This study examines the role of post completion audits (PCAs) in assisting
managers to learn about the project definition stage of capital budgeting
decisions. A two-stage model is proposed in which environmental uncertainty
moderates the association between PCAs and managers' learning. The second
stage proposes that learning is associated with higher managerial performance.
The results of a survey of 85 managers provides evidence supporting these
propositions. The findings suggest that designers of management accounting
systems should be circumspect in their expectations of the potential beneficial
effects from PCAs. It seems likely that PCAs are best suited for improving
managerial learning in more certain operating situations. The results also
support the view that learning is a significant attribute of higher performing
managers.
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A Capital Budgeting Case Study: An Analysis
of a Choice Process and Roles of Information
Mark K. Hirst and Jane A. Baxter
This paper seeks to investigate the descriptive validity of theoretical
typifications of how choices are made in organizational settings, and how
information may be implicated in the choice process. The vehicle for investigating
such theoretical schemes is a case study of a capital budgeting investment
decision.
Four models of choice (bounded rationally, standard operating procedures,
political, and artifactual) and three roles of information (instrumental,
strategic, and symbolic) are used to structure observations and to analyze
the data. The major findings are that more than one model of choice is
necessary to describe the choice process, and similarly, more than one
role of information is evident in the process. Discussion centers on the
relations among choice models and roles of information.
Return
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Incorporating Statistical Power into
the Test of Significance Procedure: A Methodological and Empirical Inquiry
R. Murray Lindsay
Statistical power represents the probability of rejecting the null hypothesis
when it is false and some specific alternative hypothesis is true. Despite
the crucial role it plays in providing for meaningful tests and obtaining
reliable inferences, the concept of statistical power rarely surfaces in
accounting--either methodological or empirical. The purpose of this article
is to redress this imbalance in arguing for its formal inclusion in the
test of significance procedure. Specifically, the article examines what
power is, the serious consequences of failing to formally incorporate power
in the inference process, and the twofold role of power analyses in classical
statistical tests. In addition, a survey of management accounting research
is undertaken for the purposes of calculating the statistical power of
the average study and determining researchers' awareness and attention
to power considerations. The results indicate that researchers display
little understanding or appreciation for the importance of power in conducting
their research; moreover, they have paid a dear price for this: the power
of the average study is unacceptably low. Also, the obtained level of significance
p continues to be the predominant measure used by many researcher
to interpret the meaningfulness and overall importance of their results.
Taken in total, these findings suggest a situation which can be expected
to impede the development of the discipline. Finally, a redress to the
low power problem facing many behavioral researchers is examined, along
with an application of the approach.
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Confidence and Information Usage: Evidence
from a Bankruptcy Prediction Task
Thomas I. Selling
The subject of confidence in judgment tasks has been discussed extensively
in the experimental psychology literature, but little is known about the
prevalence of overconfidence in tasks involving the selection and processing
of information, an issue of fundamental concern to accountants. The current
research employs a bankruptcy prediction task to investigate the effect
of information choice on confidence, and factors that may cause unjustified
confidence in judgments to occur. The results tend to support existing
behavioral theories of confidence. However, support is generally conditional
on the level of task predictability. In addition, information usage is
highly related to confidence in a non-linear fashion, and there exists
a negative correlation between overconfidence and information usage.
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