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Prior research suggests that decision-makers can be biased by anecdotal data, even in the presence of more informative statistical data. A bias for anecdotal data can have significant implications for managers since judgments are often made when both statistical and anecdotal data are present. However, since much of the prior research has been conducted primarily on non-professionals engaged in unfamiliar tasks, it is unclear whether anecdotal biases will occur in managerial decision-making, where training and professional duties may reduce the effects of such a bias. Smith and Kida (1991) note, for example, that judgment biases are often mitigated or modified when trained professionals perform job-related tasks. In this study, managers and others with significant business experience were asked to make a capital budgeting decision in the presence of both statistical and anecdotal data. The results indicate that decision-makers ignored, or underweighted, statistical data in favor of anecdotal data, leading to suboptimal decisions. However, a scientific judgment orientation decision-aid did help to mitigate the effects of that bias. The implications of these results for decision-making in managerial accounting are discussed.

This study aims to demonstrate how pressures (incentives) in the audit environment can lower audit quality because of a breakdown between professionally skeptical (PS) judgment (risk assessment) and PS action (testing).

The authors used a Qualtrics-based experiment with attitude change as a proxy measure of cognitive dissonance (CD). The authors analyze the results using a one-way independent between-group ANOVA with post hoc tests and t-tests.

The authors find that auditors experience CD when they fail to take appropriate high PS action (audit tests) that are in line with high PS judgment (risk assessments). The motivational force to reduce CD drives auditors to revise their assessments upward (rank higher), lower diagnostic audit tests (PS actions) and lower risk assessments (PS judgments). This leads to lower overall professional skepticism, and hence lower audit quality.

This investigation provides an empirical investigation of Nelson’s (2009) model of professional skepticism and demonstrates a specific mechanism for how incentives in the audit environment lower audit quality. Based on the findings, treatments to enhance audit quality can benefit by strengthening the critical link between PS judgments (risk assessments) and PS actions (audit tests).

The purpose of this study is to examine the impact of psychological climate perceptions on the employee’s intent to comply with the organization’s whistle-blower policies. This study also endeavors to add evidence to the debate concerning the effectiveness of implementing anti-retaliation measures to improve whistle-blowing behavior. Survey results show that psychological climate perceptions of fairness and commitment to the organization influence the employee’s attitude toward whistle-blower policies, perception of how important others within the organization view the act of whistle-blowing and the employee’s intent to blow the whistle. The results of this study also suggest that anti-retaliation measures used by government policy makers and organizations to improve whistle-blowing behavior may not be an effective strategy. This manuscript discusses the implications of the findings on whistle-blowing behavior and the debate concerning anti-retaliation measures.

The purpose of this study is to construct and test a new measure of auditor orientation using two audit quality-related tasks.

The sample consists of 66 Dutch and US graduate auditing students. Participants complete two tasks: one involving a lease classification and another, supplemental experiment involving a contingent liability judgment. The purpose is to construct a new measure for rules-based/ principles-based orientation. Rigorous, psychometric testing confirms that parts of tolerance for ambiguity (TOA) and need for cognition (NFC), together, form a new construct the authors identify as auditor orientation. The authors next conduct a main and supplemental experiment with novice auditor participants from both the USA and the Netherlands.

The authors begin with rigorous, psychometric testing using participants from the USA and the Netherlands. The resulting 10-item scale combines parts of TOA and NFC to reflect auditor orientation. The common themes across scale items are high (low) adaptability to complexity and a substance-over-form (form-over-substance) preference for principles-oriented (PO) (rules-oriented [RO]) auditors. Conducting two experiments, results from two distinct tasks confirm our research question; novice auditors classified as RO (PO) are more (less) likely to recommend a more aggressive/client-favorable disclosure judgment.

Auditor orientation (i.e. rules or principles) has a significant impact on the application of rules-based or principles-based standards. How the standards are applied, therefore, influences auditor decision-making and thus audit quality. However, there is a paucity of auditor orientation research to date, including a validated measure. The study contributes a new measure for future research in the related accounting standards and audit quality literatures, while also identifying a potentially important construct in auditor training.

Nonperforming assets in any banking system have stressed the economic health of nations. Resultantly, literature has given considerable impetus to predict failures and bankruptcy. Past studies have focused on the outcome of failures, while, there is a dearth of studies focusing on ongoing firms in bad shape. We plug this gap and attempt to identify underlying communication patterns for firms witnessing prolonged underperformance. Using text mining, we extract and analyze semantic, linguistic, emotional, and sentiment-based features in non-numeric communication channels of these poor-performing firms and their peers. These uncovered patterns highlight the use of vocabulary and tone of communication, in correspondence to their financial well-being. Furthermore, using such patterns, we deploy various Machine Learning algorithms to identify loser firm(s) way ahead in time. We observe promising accuracy over a time window of five years. Such early warning signals can be of critical importance to various stakeholders of a firm. Exploration of writing style-related features for any firm would help its investors, lending agencies to assess the likelihood of future underperformance. Firm management can use them to take suitable precautionary measures and preempt the future possibility of distress. While investors and lenders can be benefitted from this incremental information to identify the likelihood of future failures.

This study reviews the existing literature on the U.S. peer review system and the Public Company Accounting Oversight Board (PCAOB) inspection system to assess our knowledge of audit regulation. The traditional self-regulatory system of the accounting profession came to an end, in 2002, when the PCAOB was established to oversee the audit firms of publicly traded companies. This paper contributes to the controversial debate about self-regulation versus independent regulation by analyzing, categorizing, and comparing the research findings on the peer review system and the PCAOB system along three dimensions: the validity of peer reviews and PCAOB inspections, the recognition of reviews and inspections by decision-makers (e.g., investors, bankers, committees), and the effect of reviews and inspections on audit quality. Synthesizing the research on the regulatory regimes suggests that the notion of external quality control, both through peer reviews and government inspections, is positively linked with an improvement of audit quality. At the same time, the analysis indicates that external users do not seem to recognise peer review and PCAOB reports as very useful instruments for decision-making, which is in line with an identified rather skeptical perception of the audit profession on reviews and inspections. Overall, this study reveals that although the academic literature on peer review and PCAOB inspection is extensive it has not produced definitive conclusions concerning various aspects of audit regulation. This paper shows how this blurred picture is due to conflicting research findings, the dominance of the quantitative research paradigm, and unchallenged assumptions within the literature, and concludes by proposing research opportunities for the future.

Prior research finds that auditors can be distinctively committed to multiple workplace targets (e.g., their audit firm, supervisors, profession, and clients). This study investigates an underexamined target of auditor commitment – engagement teams. Given that these teams are responsible for performing key audit tasks for clients and external stakeholders, we argue that auditors' commitment to their team can affect auditor behavior. Using a sample of 121 auditors, our results indicate that quality social exchange relationships between individual auditors and their engagement teams, activated by perceptions of team fairness, and reciprocated with team commitment, are associated with beneficial group-oriented behavior. Specifically, we posit and find that perceived team fairness predicts perceived team support, perceived team support predicts team commitment, and team commitment predicts citizenship behavior directed toward the engagement team (e.g., helping the team by taking on extra responsibilities during an audit). We also find that the social exchange proxies of perceived team support and team commitment sequentially mediate the positive effect of perceived team fairness on team citizenship behavior, and that team commitment is a stronger predictor of team citizenship behavior than auditors' commitment to their firm.

This study aims to explore how cultural beliefs and traditions are integral to understanding indigenous mental health conditions (MHCs) and traditional healing (TH). However, Nigerian cultural beliefs about MHCs and TH are under-researched.

This study adopted a qualitative design using critical realist and social constructionist perspectives to explore Nigerian mental health-care practitioners (MHCPs) and lay participants’ (LPs) views regarding MHCs and TH. Purposive and snowball sampling techniques were used to select 53 participants (MHCPs = 26; LPs = 27; male = 32; female = 21) in four Nigerian cities (Ado-Ekiti, Enugu, Jos and Zaria). Data were collected using semi-structured interviews and analysed through thematic analyses.

The data sets revealed three overarching themes, namely, existing cultural beliefs about MHCs as spiritual curse; description of TH as the first treatment modality for MHCs; and perceived stigma associated with MHCs and help-seeking behaviours.

A study on Nigerian cultural beliefs and TH contributes meaningfully to mental health systems. Future research and policy initiatives could explore ways of optimising TH practices and community awareness programmes to increase access to mental health care in Nigeria.