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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 jrigsby@cobilan.msstate.edu.
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 testretest 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 Peoples 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 subordinates 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
hypothesesgeneration 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
auditors failure to obtain and use knowledge of LSLs 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 SECs 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 auditors 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 auditors 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 Wallers (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 auditors 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 auditors 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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