Accounting Guidance Flexibility, Auditors’ Ethical Characteristics, and Blame

Advances in Accounting Behavioral Research

ISBN: 978-1-78560-978-7, eISBN: 978-1-78560-977-0

ISSN: 1475-1488

Publication date: 26 October 2016


We investigate the social and legal blame that investors assign to auditors following unfavorable outcomes using the precision of accounting guidance described as principles-based (i.e., less-precise) or rules-based (i.e., more precise), and why investors assign blame at differing levels. We also examine how the precision of accounting guidance is related to perceptions of auditors’ ethical characteristics. We posit that blame assigned to auditors differs based on auditors’ perceived decision-making control. Results indicate a significant association between the precision of accounting guidance and social blame, and a positive association between social blame and legal blame under standards described as less-precise. Investors are also more likely to make negative evaluations of the auditor’s ethical characteristics under less-precise accounting following an unfavorable outcome, which helps explain the association between social and legal blame. Our findings suggest that auditors could face additional blame as a result of a trend toward less-precise accounting guidance, with investors being more likely to question the auditors’ ethical characteristics following unfavorable outcomes.




We express gratitude for helpful comments we received from Allen Blay, Rich Houston, Ellery Newkirk, Jeffrey Pickerd, Jill Weber, and participants at the 2012 Brigham Young University Accounting Research Symposium, 2013 American Accounting Association Audit Midyear Meeting, and 2013 American Accounting Association Annual Meeting.


Cornell, R. and Warne, R. (2016), "Accounting Guidance Flexibility, Auditors’ Ethical Characteristics, and Blame", Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 19), Emerald Group Publishing Limited, pp. 97-125.

Download as .RIS



Emerald Group Publishing Limited

Copyright © 2016 Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.