Is auditor financial decision-making affected by prior audit report information? A behavioral approach

The role of financial experts is to provide their professional judgments with an opinion included in the financial reports after reviewing an entity's financial information, following a specific audit process. We investigate whether confirmation bias (through prior audit opinions) occurs among...

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Autores: Muñoz Izquierdo, Nora, Camacho Miñano, Juana María Del Mar, Sánchez Martín, María Pilar, Pascual Ezama, David
Tipo de recurso: artículo
Fecha de publicación:2024
País:España
Institución:Universidad Complutense de Madrid (UCM)
Repositorio:Docta Complutense
Idioma:inglés
OAI Identifier:oai:docta.ucm.es:20.500.14352/126220
Acceso en línea:https://hdl.handle.net/20.500.14352/126220
Access Level:acceso abierto
Palabra clave:3
G4
G40
G41
Auditing
Auditors
Financial information
Behavioral auditing
Audit opinion
Professional experience
Ciencias Sociales
Finanzas
Economía
53 Ciencias Económicas
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spelling Is auditor financial decision-making affected by prior audit report information? A behavioral approachMuñoz Izquierdo, NoraCamacho Miñano, Juana María Del MarSánchez Martín, María PilarPascual Ezama, David3G4G40G41AuditingAuditorsFinancial informationBehavioral auditingAudit opinionProfessional experienceCiencias SocialesFinanzasEconomía53 Ciencias EconómicasThe role of financial experts is to provide their professional judgments with an opinion included in the financial reports after reviewing an entity's financial information, following a specific audit process. We investigate whether confirmation bias (through prior audit opinions) occurs among auditors during the audit process and decision-making, and whether experience mitigates this effect. A total of 175 non-experienced auditors run a 2x4 between-subjects experiment (experiment 1) studying how financial information (IV with two levels: negative and neutral/positive) and previous audit report (IV with four levels: absence, negative, moderately negative, and positive) might influence the issuance of the subsequent decision-making (DV). In addition, a total of 32 junior level 1 auditors (less than one year of experience), 31 junior level 2 auditors (up to 3 years of experience) and 20 senior auditors (more than 3 years of experience) run a 2 × 4 × 3 between-subjects experiment (experiment 2) analyzing if experience (IV with three levels of experience: less than one-year, between one and three years, more than three years) mitigates this effect (experiment 2). Results confirm that the previous-year audit report affect auditors' current assessment, showing that positive and negative prior opinions persuade auditors when suggesting the next one. This finding is relevant as auditors' opinions could be conditioned by prior opinions instead of their own expertise. Our evidence also suggests that professional experience mitigates this influence on auditors' assessments. Consequently, this study has relevant implications for partners, audit professionals and audit firm recruiters. A general implication is that auditor training courses should reinforce the auditor's own expertise and criteria based on the deep analysis of financial and economic data rather than on the work of previous auditors.ElsevierUniversidad Complutense de Madrid20242024-05-3020242024-05-30journal articlehttp://purl.org/coar/resource_type/c_6501VoRhttp://purl.org/coar/version/c_970fb48d4fbd8a85info:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/20.500.14352/126220reponame:Docta Complutenseinstname:Universidad Complutense de Madrid (UCM)InglésengAgencia Estatal de Investigación http://dx.doi.org/10.13039/501100011033 Plan Estatal de Investigación Científica y Técnica y de Innovación 2017-2020 PID2020-115700RB-I00 PATRONES PARA IDENTIFICAR RIESGOS DE LAS EMPRESAS ZOMBIES Y LAS BIO-EMPRESAS UTILIZANDO INFORMACION FINANCIERAopen accesshttp://purl.org/coar/access_right/c_abf2Attribution-NonCommercial-NoDerivatives 4.0 Internationalhttp://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccessoai:docta.ucm.es:20.500.14352/1262202026-06-02T12:44:21Z
dc.title.none.fl_str_mv Is auditor financial decision-making affected by prior audit report information? A behavioral approach
title Is auditor financial decision-making affected by prior audit report information? A behavioral approach
spellingShingle Is auditor financial decision-making affected by prior audit report information? A behavioral approach
Muñoz Izquierdo, Nora
3
G4
G40
G41
Auditing
Auditors
Financial information
Behavioral auditing
Audit opinion
Professional experience
Ciencias Sociales
Finanzas
Economía
53 Ciencias Económicas
title_short Is auditor financial decision-making affected by prior audit report information? A behavioral approach
title_full Is auditor financial decision-making affected by prior audit report information? A behavioral approach
title_fullStr Is auditor financial decision-making affected by prior audit report information? A behavioral approach
title_full_unstemmed Is auditor financial decision-making affected by prior audit report information? A behavioral approach
title_sort Is auditor financial decision-making affected by prior audit report information? A behavioral approach
dc.creator.none.fl_str_mv Muñoz Izquierdo, Nora
Camacho Miñano, Juana María Del Mar
Sánchez Martín, María Pilar
Pascual Ezama, David
author Muñoz Izquierdo, Nora
author_facet Muñoz Izquierdo, Nora
Camacho Miñano, Juana María Del Mar
Sánchez Martín, María Pilar
Pascual Ezama, David
author_role author
author2 Camacho Miñano, Juana María Del Mar
Sánchez Martín, María Pilar
Pascual Ezama, David
author2_role author
author
author
dc.contributor.none.fl_str_mv Universidad Complutense de Madrid
dc.subject.none.fl_str_mv 3
G4
G40
G41
Auditing
Auditors
Financial information
Behavioral auditing
Audit opinion
Professional experience
Ciencias Sociales
Finanzas
Economía
53 Ciencias Económicas
topic 3
G4
G40
G41
Auditing
Auditors
Financial information
Behavioral auditing
Audit opinion
Professional experience
Ciencias Sociales
Finanzas
Economía
53 Ciencias Económicas
description The role of financial experts is to provide their professional judgments with an opinion included in the financial reports after reviewing an entity's financial information, following a specific audit process. We investigate whether confirmation bias (through prior audit opinions) occurs among auditors during the audit process and decision-making, and whether experience mitigates this effect. A total of 175 non-experienced auditors run a 2x4 between-subjects experiment (experiment 1) studying how financial information (IV with two levels: negative and neutral/positive) and previous audit report (IV with four levels: absence, negative, moderately negative, and positive) might influence the issuance of the subsequent decision-making (DV). In addition, a total of 32 junior level 1 auditors (less than one year of experience), 31 junior level 2 auditors (up to 3 years of experience) and 20 senior auditors (more than 3 years of experience) run a 2 × 4 × 3 between-subjects experiment (experiment 2) analyzing if experience (IV with three levels of experience: less than one-year, between one and three years, more than three years) mitigates this effect (experiment 2). Results confirm that the previous-year audit report affect auditors' current assessment, showing that positive and negative prior opinions persuade auditors when suggesting the next one. This finding is relevant as auditors' opinions could be conditioned by prior opinions instead of their own expertise. Our evidence also suggests that professional experience mitigates this influence on auditors' assessments. Consequently, this study has relevant implications for partners, audit professionals and audit firm recruiters. A general implication is that auditor training courses should reinforce the auditor's own expertise and criteria based on the deep analysis of financial and economic data rather than on the work of previous auditors.
publishDate 2024
dc.date.none.fl_str_mv 2024
2024-05-30
2024
2024-05-30
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
VoR
http://purl.org/coar/version/c_970fb48d4fbd8a85
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/20.500.14352/126220
url https://hdl.handle.net/20.500.14352/126220
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.relation.none.fl_str_mv Agencia Estatal de Investigación http://dx.doi.org/10.13039/501100011033 Plan Estatal de Investigación Científica y Técnica y de Innovación 2017-2020 PID2020-115700RB-I00 PATRONES PARA IDENTIFICAR RIESGOS DE LAS EMPRESAS ZOMBIES Y LAS BIO-EMPRESAS UTILIZANDO INFORMACION FINANCIERA
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Docta Complutense
instname:Universidad Complutense de Madrid (UCM)
instname_str Universidad Complutense de Madrid (UCM)
reponame_str Docta Complutense
collection Docta Complutense
repository.name.fl_str_mv
repository.mail.fl_str_mv
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