The Effects Of Hindsight Bias On Auditors Confidence In Going-Concern Judgments And On The Audit Opinion Decision

Anderson, Kim L.

doi:10.19030/jber.v9i9.5631

Cited by 3 publications

(1 citation statement)

References 25 publications

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“…Menon and Schwartz (1985), however, did not discover that relation. Auditors become more conservative in their going-concern judgments and the resulting audit opinion decision (Anderson, 2011;Stunda and Pacini, 2013). In addition, empirically supports that when an audit report is changeable, auditor switching is easy (Lennox, 2000).…”

Section: Auditor Switchingmentioning

confidence: 99%

The Relation between Auditor Switching and Self-fulfilling Prophecy Effect: The Bivariate Probit Model

Lin

2014

AJFA

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This study investigates the adverse effects of auditor initial going-concern qualified opinion (IGCQ) on the stock and audit market employing the bivariate probit model on Taiwanese public firms. Results show that (1) unobservable interference factors may be responsible for the adverse market effects, (2) interaction exists between the stock and audit markets, (3) the probability of auditor switching is higher if the client is delisted from the market or influenced endogenously, (4) the self-fulfilling prophecy effect is not supported in the Taiwanese stock market; (5) one year after an IGCQ is issued, the client is more likely to switch auditors.

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Section: Auditor Switchingmentioning

confidence: 99%

The Relation between Auditor Switching and Self-fulfilling Prophecy Effect: The Bivariate Probit Model

Lin

2014

AJFA

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The Effects Of Hindsight Bias On Experienced And Inexperienced Auditors' Relevance Ratings Of Adverse Factors Versus Mitigating Factors

Anderson

2014

JBER

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<p>Hindsight bias is the tendency for individuals who have been provided with the outcome of an uncertain event to systematically overstate their abilities to have predicted that outcome in foresight. Individuals also rate cues supporting this known outcome as more relevant than the cues supporting alternative outcomes. In an experiment using the case data of a troubled company, the current study explores the effects of outcome information on both experienced and inexperienced auditors' going-concern judgments (i.e., whether or not they believed the company would succeed or fail within one year) and the extent to which the outcome information influences the auditors' relevance ratings of the case cues and whether this effect is greater for experienced auditors as compared to inexperienced auditors. The current study predicts that in this task, auditors' implicit knowledge of the differential costs associated with alternative audit decision errors, coupled with the nature of auditor training, will influence their cognitive processing, leading to results that differ from prior psychological studies in a systematic manner.</p> <p>Specifically, the current study predicted and found that despite the outcome information provided, both experienced and inexperienced auditors rated failure cues (i.e., adverse factors) as more relevant than success cues (i.e., mitigating factors); the effect was not greater for experienced auditors. However, the current study also predicted and found that due to hindsight bias, auditors, who are provided with the failure outcome, were more likely to rate the adverse factors as more relevant than the mitigating factors than did the auditors who were not provided with outcome information.</p>

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Internal Auditors Skepticism in Detecting Fraud: A Quantitative Study

Castro

2013

SSRN Journal

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The Effects Of Hindsight Bias On Auditors Confidence In Going-Concern Judgments And On The Audit Opinion Decision

Abstract: This paper examines the extent to which hindsight bias influences auditors' confidence in their

Cited by 3 publications

References 25 publications

The Relation between Auditor Switching and Self-fulfilling Prophecy Effect: The Bivariate Probit Model

The Relation between Auditor Switching and Self-fulfilling Prophecy Effect: The Bivariate Probit Model

The Effects Of Hindsight Bias On Experienced And Inexperienced Auditors' Relevance Ratings Of Adverse Factors Versus Mitigating Factors

Internal Auditors Skepticism in Detecting Fraud: A Quantitative Study

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