Table of Contents
• A theoretical framework of the relationship between public accounting firms
and their auditors
Elizabeth Dreike Almer, Julia L. Higgs, and Karen L. Hooks
• Does “political bias” in the DIT or Dit-2 threaten validity
in studies of CPAs?
Charles D. Bailey, Thomas J. Phillips, Jr., and Stephen B.
Scofield (Deceased)
• Relative weighting of common and unique balanced scorecard
measures by knowledgeable decision makers
William N. Dilla and Paul John Steinbart
• Alternative measures of managers’ performance, controllability
and the outcome effect
Dipankar Ghosh
• Eliciting experts’ context knowledge with theory-based
experiential questionnaires
Michael Gibbins and Sandy Q. Qu*
• Accountants’ commitment to their profession: Multiple dimensions
of professional commitment and opportunities for future research
Mathew Hall, David Smith, and Kim Langfield-Smith
• Antecedents and consequences of quality performance
Adam S. Maiga and Fred A. Jacobs
• 20-F reconciliations and investors’ perceptions of risk,
financial performance and quality of accounting principles
James J. Maroney and Ciarán Ó hÓgartaigh
• Decision aids and experiential learning
Jacob M. Rose
• The role of social influences in using accounting performance
information to evaluate subordinates: A causal attribution
approach
Yin Xu and Brad Tuttle
• Analysis of diagnostic tasks in accounting research using
signal detection theory
Robert J. Ramsay and Richard M. Tubbs
* Commissioned by S. Kaplan
ABSTRACTS
A Theoretical Framework of the Relationship Between
Public Accounting Firms and Their Auditors
Elizabeth Dreike Almer
Portland State University
Julia L. Higgs and Karen L. Hooks
Florida Atlantic University
ABSTRACT: The behavior of auditors in the context of their
employment by public accounting firms has received significant
attention in the accounting literature. The current article
extends this literature by providing a framework identifying
what auditing professionals contribute and receive as a result
of their work efforts, as well as related influences. Using
agency theory modified with fundamental ideas from the sociology
of professions literature, we develop a model of the auditor-public
accounting firm employment relationship. This framework is
grounded in a timely, contextually rich description of the
public accounting work environment, and the pressures and
incentives faced by auditors. Propositions for future research
are suggested that arise from understanding the auditor-firm
relationship.
Does “political bias” in the DIT or DIT-2 threaten validity
in studies of CPAs?
Charles D. Bailey
University of Memphis
Thomas J. Phillips, Jr.
Louisiana Tech University
Stephen B. Scofield
(Deceased)
ABSTACT: The Defining Issues Test (DIT) has been popular
among accounting researchers, and will surely find continued
applications. The DIT-2 is still new to accounting research.
Fisher and Sweeney (1998, 2002) and Sweeney and Fisher (1998,
1999) build upon other critical research to claim that the
DIT P-score is a preference measure strongly related to political
beliefs. Experimental subjects, when asked to respond from
an “extremely liberal” perspective or to “identify the statements
designed to represent the highest levels of moral judgment,”
tend to respond differently than under official DIT instructions.
However, Rest et al. (1999) reject this approach to validity
testing, claiming that appropriate tests should address the
variance explained over and above other constructs. Based
on random samples of CPAs in public accounting practice (741
taking the DIT in 1995 and 261 taking the DIT-2 in 2001, each
of whom also responded to political preference scales) we
measure the amount of variance shared by the “ethical” and
“political” measures. In our samples, political position explains
less than ten percent of the variance in DIT and DIT-2 P scores
as well as the new N2 scores; these effect sizes are small,
so that the scores may not be seriously threatened by confounding.
__________________________________________________________________
Relative weighting of common and unique balanced scorecard
measures by knowledgeable decision makers
William N. Dilla
Iowa State University
Paul John Steinbart
Arizona State University
ABSTRACT: Prior research has found that decision makers with
limited experience in using the Balanced Scorecard (BSC) ignored
measures that reflect the unique strategy of a business unit
and based their performance evaluations solely on measures
common across units. The purpose of this study is to investigate
whether decision makers who have had training and experience
in designing BSCs exhibit the same behavior. Results of an
experiment show that decision makers who are knowledgeable
about the BSC attended to both common and unique measures,
but placed greater emphasis on the former. These results hold
in both a performance evaluation judgment and in a bonus allocation
decision. We attribute these results to the knowledge participants
acquired through classroom training on the design of the BSC,
but cannot rule out an alternative explanation that our results
differ from previous research because participants in our
study were undergraduate accounting and information systems
majors, rather than MBA students.
Eliciting experts’ context knowledge with theory-based experiential
questionnaires
Michael Gibbins and Sandy Q. Qu
University of Alberta
ABSTRACT: This paper describes a useful addition to behavioral
researchers’ set of research methods, supplementing and extending
what can be learned from interviews, surveys and experiments.
The experiential questionnaire (EQ) is designed to study the
context within which experts behave, guided by theory about
that context and by extensive pre-testing with representatives
of the target population of respondents.
An EQ is built around expert respondents’ experience of their
context, the world in which they function, as represented
by cases they have experienced and can describe in detail.
The value of the data is supplemented by having the respondents
choose the cases and do much of the categorization and coding
of their own responses. The EQ’s questions are worded in matter-of-fact
terms familiar to the respondents, to encourage respondents
to report their experienced contexts dispassionately.
This paper describes the EQ method, with examples from the
mostly auditing published studies and suggestions about extensions
into other areas of accounting research. The value of studying
experts’ context is addressed, as are matching of respondents
and theory, designing and testing an EQ, and some threats
to validity of the data resulting from an EQ. References to
related research literatures are included.
Alternative measures of manager’s performance,
controllability and the outcome Effect
Dipankar Ghosh
University of Oklahoma
ABSTRACT: This research examines whether alternative performance
evaluation measures of managers (return of investment, sales
per square foot, customer satisfaction and employee satisfaction)
with varying controllability increases or decreases the extent
of the outcome effect and whether asking the evaluator to
assess the evaluatee’s controllability of these measures prior
to the evaluation mitigates the effect. The outcome effect
occurs when outcome knowledge systematically influences the
evaluator’s assessment of the evaluatee irrespective of the
quality of his or her initial decision resulting in the outcome.
The experimental results reveal that the outcome effect increased
as the controllability of the retail store manager’s outcome
measure increased, with the increase being more for non-financial
measures than for financial measures. The results also show
that controllability assessment of the outcome measures prior
to the actual evaluation reduced the outcome effect across
all measures.
Key words: Performance evaluation, performance measures,
outcome effect, controllability
Accountants’ commitment to their profession: Multiple dimensions
of professional commitment and opportunities for future research
Mathew Hall
David Smith
University of Melbourne
Kim Langfield-Smith
Monash University
ABSTRACT: Professional commitment (PC) refers to attachments
that individuals form to their profession, and has been linked
to outcomes such as improved job satisfaction and reduced
likelihood of leaving the profession (Harrell et al. 1986;
Meixner and Bline 1989). Recent arguments in the organizational
behavior literature have emphasized the importance of developing
a more complete understanding of PC (Irving et al. 1997; Meyer
and Allen 1997). Research has demonstrated empirically the
existence of multiple dimensions of PC and found that they
relate differently to important affective and behavioral outcomes
(Meyer et al. 1993; Irving et al. 1997). Despite these developments,
no published studies have examined the existence and/or effects
of multiple dimensions of accountants’ PC. This paper reviews
the literature to identify important antecedents and outcomes
of accountants’ PC. Opportunities for future research that
incorporate a multi-dimensional view of accountants’ PC are
presented.
________________________________________________________________________
20-F reconciliations and investors’ perceptions of risk,
financial reporting and quality of accounting principles
James J. Maroney
Northeastern University
Ciarán Ó hÓgartaigh
Dublin City University
ABSTRACT: This paper investigates whether the increases and
decreases to earnings and stockholders’ equity presented in
20-F reconciliations influence perceptions of the risk of
investing, the quality of the accounting principles and the
financial performance of the reporting firm. The research
results indicate that subjects perceive the risk of a hypothetical
firm filing a 20-F reconciliation with reconciliation decreases
to be higher, and the quality of accounting principles lower,
than a hypothetical firm either complying with U.S. GAAP or
filing a 20-F reconciliation with reconciliation increases.
Additional analysis suggests that these significant effects
are due to a negative effect from the reconciliation decrease
consistent with the effects predicted by attribute framing
theory. The findings have implications for the SEC as they
consider whether foreign registrants on U.S. exchanges should
be allowed to comply with international accounting standards
without reconciliation to U.S. GAAP. These findings also have
implications for foreign registrants on U.S exchanges. The
results indicate that firms that have higher non-U.S. GAAP
earnings (and a consequent reconciliation decrease) should
comply with U.S. GAAP as the reporting of a reconciliation
decrease creates a negative perception of the firm.
KEY WORDS: 20-F reconciliations, Risk perceptions, Foreign
registrants, Quality of accounting principles.
________________________________________________________________________
ANALYSIS OF DIAGNOSTIC TASKS IN ACCOUNTING RESEARCH USING
SIGNAL DETECTION THEORY
Robert J. Ramsay
University of Kentucky
Richard M. Tubbs
University of Iowa
ABSTRACT: Many accounting judgments are diagnostic tasks in
which accountants, auditors, managers, or investors discriminate
among possible states and decide which one exists. To measure
the accuracy of such decisions, most accounting research employs
percentage correct, a measure proven to be invalid and unreliable,
primarily because it does not control for response bias. This
paper describes Signal Detection Theory (SDT), a theoretical
model of diagnostic tasks that has been empirically supported
in many fields. SDT provides superior measures of accuracy
and response bias. We discuss the benefits of employing SDT
in accounting research and describe an SDT-based reanalysis
of data related to two published accounting studies that results
in revised conclusions and important additional insights.
Keywords: Diagnostic tasks; Signal Detection Theory; Accuracy;
Response bias; Confidence.
Decision aids and experiential learning
Jacob M. Rose
Montana State University
ABSTRACT: Rose and Wolfe (2000) demonstrated that decision
aid design is critical to learning from decision aids, and
aids that produce less cognitive load result in superior learning
by aid users compared to aids that produce more cognitive
load. The current research investigates whether a tax decision
aid has differential affects on the knowledge acquisition
of accounting students with varying perceived aptitudes for
tax and interest in tax as a career. Results indicate that
participants with more interest in and perceived aptitude
for tax acquire more tax-related knowledge during manual task
completion than participants with less perceived aptitude
and interest. Similar to prior research, decision aids generally
decrease learning relative to unaided environments. When decision
aids do not produce a heavy cognitive load, however, participants
with less perceived aptitude for and interest in tax learn
as much in aided environments as they learn in unaided environments.
________________________________________________________________________
The Role of Social Influences in Using Accounting Performance
Information to Evaluate Subordinates: A Causal Attribution
Approach
Yin Xu
Old Dominion University
Brad Tuttle
University of South Carolina
ABSTRACT: One important role of accounting information is
to provide objective information to assist decision-makers
in evaluating the performance of their subordinates. Yet,
whether decision-makers use accounting data in an objective
fashion, independent of interpersonal factors is an open question.
The purpose of this study is to investigate whether similarities
in work style (innovator vs. adaptor) between a manager and
a subordinate influences the manager’s causal attributions
and subsequent performance evaluation for the subordinate,
given accounting performance indicators.
The study is conducted in an experimental setting and the
research analysis used is developed within the framework of
a structural equation model. The results of the study provide
initial evidence that interpersonal factors such as work style
similarity and personal liking moderate how supervisors use
accounting information when they make performance evaluation
decisions. The more similar work style between supervisor
and subordinate, the more the supervisor likes the subordinate.
This in turn directly influences what the supervisor believes
is the cause of the subordinate’s performance.
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