Thesis (Ph. D.)--University of Oklahoma, 1995. / Includes bibliographical references.

In response to the release of one of its Public Company Accounting Oversight Board (PCAOB or Board) inspection reports, Deloitte notes that “[p]rofessional judgments of reasonable and highly competent people may differ as to the nature and extent of necessary auditing procedures, conclusions reached and required documentation” (PCAOB, 2008, 30). Other responses to PCAOB findings echo this sentiment. Stakeholders need to understand causes of differences between experts’ professional judgments to effectively utilize PCAOB inspection findings and firms’ responses to those findings. This study uses Social Identity Theory to explore whether role identity as an audit partner, internal reviewer, or PCAOB inspector, influences an expert’s judgments in an ambiguous decision environment. I find that professional judgments do not differ based on professional identity. This study also examines whether the presence or absence of outcome knowledge explains judgment differences among auditing experts. Consistent with prior research, e.g. Peecher & Piercey, 2008, outcome knowledge does affect experts’ professional judgment. I also find that experts’ level of organizational identification and membership esteem impacts professional judgment. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2014. / FAU Electronic Theses and Dissertations Collection

by Siu-yeung Chan. / Publication date from spine. / Thesis (Ph.D.)--Chinese University of Hong Kong, 1995. / Includes bibliographical references (leaves 254-278). / Chapter CHAPTER I --- INTRODUCTION --- p.1 / Chapter 1.1 --- Background of the Study --- p.1 / Chapter 1.2 --- Research Problems and Objectives --- p.5 / Chapter 1.3 --- Justification for the Study --- p.7 / Chapter 1.4 --- Research Model and Hypotheses --- p.9 / Chapter 1.4.1 --- Research Model --- p.9 / Chapter 1.4.2 --- Research Hypotheses --- p.10 / Chapter 1.5 --- Research Methodology --- p.12 / Chapter 1.6 --- Definitions of Key Terms --- p.14 / Chapter 1.7 --- Scope of the Study --- p.16 / Chapter 1.8 --- Organisation of the Thesis --- p.17 / Chapter CHAPTER II --- LITERATURE REVIEW ON BEHAVIOURAL DECISION THEORY --- p.19 / Chapter 2.1 --- Introduction --- p.19 / Chapter 2.2 --- Behavioural Decision Theory: Historical Development --- p.20 / Chapter 2.3 --- Bounded Rationality --- p.22 / Chapter 2.4 --- Lens Model --- p.25 / Chapter 2.5 --- Heuristics and Biases --- p.27 / Chapter 2.5.1 --- Overview --- p.27 / Chapter 2.5.2 --- Availability Heuristic --- p.28 / Chapter 2.5.3 --- Anchoring and Adjustment Heuristic --- p.29 / Chapter 2.5.4 --- Representativeness Heuristic --- p.31 / Chapter 2.5.5 --- Conjunction Fallacy --- p.32 / Chapter 2.5.6 --- Hindsight Bias --- p.34 / Chapter 2.5.7 --- Order Effects in Brief Updating --- p.35 / Chapter 2.5.7.1 --- Evidence Encoding --- p.36 / Chapter 2.5.7.2 --- Response Mode --- p.37 / Chapter 2.5.7.3 --- Adjustment Weighting --- p.38 / Chapter 2.5.7.4 --- Order Effects --- p.39 / Chapter 2.5.8 --- Framing Effect --- p.40 / Chapter 2.5.9 --- Sunk Cost Effect --- p.42 / Chapter 2.5.10 --- Confirmation Bias --- p.44 / Chapter 2.5.11 --- Accountability --- p.47 / Chapter 2.5.12 --- Base-Rate Fallacy --- p.49 / Chapter 2.5.12.1 --- Reduction of the Base-Rate Fallacy --- p.51 / Chapter 2.5.12.1.1 --- The Relevance of Base-Rate Information --- p.51 / Chapter 2.5.12.1.2 --- The Relevance of Case-Specific Evidence --- p.53 / Chapter 2.5.12.2 --- Effects of Need for Cognition on the Base-Rate Fallacy --- p.54 / Chapter 2.5.13 --- Overconfidence Effect --- p.56 / Chapter 2.5.13.1 --- Calibration and Calibration Curve --- p.58 / Chapter 2.5.13.2 --- Factors Affecting Appropriateness of Confidence --- p.60 / Chapter 2.5.13.2.1 --- Task Factors --- p.60 / Chapter 2.5.13.2.2 --- Environmental Factors --- p.61 / Chapter 2.5.13.2.3 --- Individual Difference Factors --- p.63 / Chapter 2.5.13.3 --- Methods Promoting Appropriate Confidence --- p.64 / Chapter 2.5.13.4 --- Appropriateness of Experts' Confidence --- p.67 / Chapter 2.5.13.5 --- Conceptual and Methodological Issues --- p.68 / Chapter 2.6 --- Contingent Decision Behaviour --- p.72 / Chapter 2.6.1 --- Overview --- p.72 / Chapter 2.6.2 --- Factors Influencing Contingent Decision Behaviour --- p.73 / Chapter 2.6.3 --- Effects of Task Variables on Selecting Decision Strategies --- p.74 / Chapter 2.6.3.1 --- Task Complexity --- p.74 / Chapter 2.6.3.2 --- Response Mode --- p.77 / Chapter 2.6.3.3 --- Information Display Mode --- p.77 / Chapter 2.6.3.4 --- Agenda Effect --- p.78 / Chapter 2.6.4 --- Effects of Context Variables on Selecting Decision Strategies --- p.78 / Chapter 2.6.5 --- Effects of Effort and Accuracy on Selecting Decision Strategies --- p.79 / Chapter 2.7 --- Integrated Framework for Behavioural Decision Theory --- p.81 / Chapter 2.7.1 --- Principle of Bounded Rationality and the Three Research Frameworks --- p.82 / Chapter 2.7.2 --- Lens Model and Heuristics-and-Biases Frameworks --- p.83 / Chapter 2.7.3 --- Lens Model and Contingent Decision Behaviour Frameworks --- p.84 / Chapter 2.7.4 --- Heuristics-and-Biases and Contingent Decision Behaviour Frameworks --- p.85 / Chapter 2.8 --- Chapter Summary --- p.85 / Chapter CHAPTER III --- LITERATURE REVIEW ON BEHAVIOURAL DECISION RESEARCH IN ACCOUNTING --- p.88 / Chapter 3.1 --- Introduction --- p.88 / Chapter 3.2 --- Overview of BDR in Accounting and the Major Determinants of Decision-Making Performance --- p.89 / Chapter 3.3 --- Heuristics and Biases --- p.93 / Chapter 3.3.1 --- Overview --- p.93 / Chapter 3.3.2 --- Availability Heuristic --- p.94 / Chapter 3.3.3 --- Anchoring and Adjustment Heuristic --- p.96 / Chapter 3.3.4 --- Order Effects in Belief Updating --- p.99 / Chapter 3.3.4.1 --- Overview --- p.99 / Chapter 3.3.4.2 --- Model Predictions --- p.100 / Chapter 3.3.4.3 --- Order Effects On Effectiveness --- p.102 / Chapter 3.3.4.4 --- Factors Affecting the Order Effects --- p.103 / Chapter 3.3.4.5 --- Summary of Accounting Research on the Order Effects in Belief Updating --- p.105 / Chapter 3.3.5 --- Conjunction Fallacy --- p.106 / Chapter 3.3.6 --- Framing Effect --- p.107 / Chapter 3.3.7 --- Confirmation Bias --- p.110 / Chapter 3.3.8 --- Hindsight Bias --- p.113 / Chapter 3.3.9 --- Accountability --- p.116 / Chapter 3.3.10 --- Base-Rate Fallacy --- p.118 / Chapter 3.3.10.1 --- Overview --- p.118 / Chapter 3.3.10.2 --- Attention to Base Rates --- p.119 / Chapter 3.3.10.3 --- Attention to Source Reliability --- p.123 / Chapter 3.3.10.4 --- Insensitivity to Sample Size --- p.127 / Chapter 3.3.10.5 --- Summary for Accounting Research on the Base-Rate Fallacy --- p.129 / Chapter 3.3.11 --- Overconfidence Effect --- p.129 / Chapter 3.3.11.1 --- Appropriateness of Auditors' Confidence --- p.130 / Chapter 3.3.11.2 --- Factors Affecting the Appropriateness of Auditors' Confidence --- p.131 / Chapter 3.4 --- Behavioural Decision Research in Financial Distress Prediction --- p.136 / Chapter 3.4.1 --- Overview --- p.136 / Chapter 3.4.2 --- Prediction Performance --- p.137 / Chapter 3.4.2.1 --- Prediction Accuracy --- p.137 / Chapter 3.4.2.2 --- Appropriateness of Confidence --- p.138 / Chapter 3.4.3 --- Factors Affecting Prediction Performance --- p.139 / Chapter 3.4.3.1 --- Overview --- p.139 / Chapter 3.4.3.2 --- Information Load --- p.139 / Chapter 3.4.3.3 --- Information Cue Choice Versus Weighing of Cues --- p.140 / Chapter 3.4.3.4 --- Base-Rate Information --- p.141 / Chapter 3.4.3.5 --- Task Predictability --- p.144 / Chapter 3.4.3.6 --- Reward Structure --- p.145 / Chapter 3.4.3.7 --- Individual Differences --- p.145 / Chapter 3.4.4 --- Group Judgment Accuracy --- p.146 / Chapter 3.4.5 --- Section Summary --- p.147 / Chapter 3.5 --- Motivation for the Current Study --- p.149 / Chapter 3.5.1 --- Research Opportunity 1 --- p.149 / Chapter 3.5.2 --- Research Opportunity 2 --- p.150 / Chapter 3.5.3 --- Research Opportunity 3 --- p.152 / Chapter 3.5.4 --- Research Opportunity 4 --- p.153 / Chapter 3.6 --- Chapter Summary --- p.154 / Chapter CHAPTER IV --- RESEARCH MODEL AND HYPOTHESES --- p.156 / Chapter 4.1 --- Introduction --- p.156 / Chapter 4.2 --- Research Model --- p.156 / Chapter 4.3 --- Research Hypotheses --- p.158 / Chapter 4.3.1 --- Hypothesis 1 --- p.158 / Chapter 4.3.2 --- Hypothesis 2 --- p.160 / Chapter 4.3.3 --- Hypothesis 3 --- p.163 / Chapter 4.3.4 --- Hypothesis 4 --- p.166 / Chapter 4.3.5 --- Hypothesis 5 --- p.168 / Chapter 4.4 --- Chapter Summary --- p.172 / Chapter CHAPTER V --- RESEARCH METHOD AND DESIGN --- p.173 / Chapter 5.1 --- Introduction --- p.173 / Chapter 5.2 --- Research Method --- p.173 / Chapter 5.3 --- Experimental Design --- p.175 / Chapter 5.4 --- Subjects --- p.177 / Chapter 5.5 --- Construction of the Experiment Instrument --- p.179 / Chapter 5.5.1 --- Selection of Sample Firms for Prediction Tasks --- p.180 / Chapter 5.5.1.1 --- Definition of Firms being in Financial Distress --- p.180 / Chapter 5.5.1.2 --- Identification of Firms in Financial Distress --- p.182 / Chapter 5.5.1.3 --- Selection of Healthy Firms --- p.182 / Chapter 5.5.1.4 --- Sample Firms in the Instrument --- p.183 / Chapter 5.5.2 --- Selection of Financial Ratios --- p.184 / Chapter 5.5.2.1 --- Logit Analysis --- p.185 / Chapter 5.5.2.2 --- Pilot Interviews --- p.187 / Chapter 5.5.2.3 --- Final Financial Ratios Used in the Instrument --- p.188 / Chapter 5.5.3 --- Modification of the Need for Cognition Scale --- p.189 / Chapter 5.5.4 --- Translation of the Experiment Instrument --- p.191 / Chapter 5.5.5 --- Pretest of the Experiment Instrument --- p.191 / Chapter 5.6 --- Administration of Experiment --- p.192 / Chapter 5.7 --- Operationalisation and Measurement of Variables --- p.193 / Chapter 5.7.1 --- Relevance of Base-Rate Information --- p.193 / Chapter 5.7.2 --- Need For Cognition --- p.195 / Chapter 5.7.3 --- Perceived Informativeness of Case-Specific Evidence --- p.197 / Chapter 5.7.4 --- Appropriateness of Confidence --- p.199 / Chapter 5.8 --- Data Analysis Methods --- p.201 / Chapter 5.9 --- Chapter Summary --- p.203 / Chapter CHAPTER VI --- ANALYSIS OF DATA --- p.205 / Chapter 6.1 --- Introduction --- p.205 / Chapter 6.2 --- Descriptive Data about the Subjects --- p.205 / Chapter 6.3 --- Stepwise Logit Analysis --- p.207 / Chapter 6.4 --- Statistical Testing for Hypotheses --- p.210 / Chapter 6.4.1 --- Testing Hypothesis 1 --- p.211 / Chapter 6.4.2 --- Unbalanced ANOVA Model --- p.212 / Chapter 6.4.3 --- Testing the Base Rate Pre-occupied by the Subjects --- p.215 / Chapter 6.4.4 --- Testing Hypothesis 2 --- p.217 / Chapter 6.4.5 --- Testing Hypothesis 3 --- p.218 / Chapter 6.4.6 --- Testing Hypothesis 4 --- p.220 / Chapter 6.4.7 --- Testing Hypothesis 5 --- p.222 / Chapter 6.5 --- Supplementary Statistical Testing of Hypotheses --- p.224 / Chapter 6.5.1 --- Separate Models for Hypotheses 2 to 5 --- p.224 / Chapter 6.5.2 --- Effects of Other Interactions --- p.224 / Chapter 6.5.3 --- Analysing NC As a Continuous Variable --- p.225 / Chapter 6.5.4 --- Repeated Measures ANOVA --- p.226 / Chapter 6.5.5 --- Additional Analysis ´ؤ Controlling for Task Predictability --- p.228 / Chapter 6.6 --- Chapter Summary --- p.232 / Chapter CHAPTER VII --- "SUMMARY, DISCUSSIONS AND IMPLICATIONS" --- p.234 / Chapter 7.1 --- Recap of the Study --- p.234 / Chapter 7.2 --- Conclusions and Discussions --- p.237 / Chapter 7.2.1 --- Hypothesis 1 --- p.237 / Chapter 7.2.2 --- Hypothesis 2 --- p.239 / Chapter 7.2.3 --- Hypothesis 3 --- p.241 / Chapter 7.2.4 --- Hypothesis 4 --- p.243 / Chapter 7.2.5 --- Hypothesis 5 --- p.244 / Chapter 7.2.6 --- Overall Conclusions --- p.246 / Chapter 7.3 --- Implications for Theory --- p.246 / Chapter 7.4 --- Implications for Practice --- p.248 / Chapter 7.5 --- Limitations of the Study --- p.249 / Chapter 7.6 --- Recommendations for Further Research --- p.252 / REFERENCES --- p.254 / APPENDIX A: EXPERIMENT INSTRUMENT (IN ENGLISH) --- p.279 / APPENDIX B: EXPERIMENT INSTRUMENT (IN CHINESE) --- p.306 / APPENDIX C: STEPWISE LOGIT ANALYSIS RESULTS --- p.333

Auditors use substantive analytical procedures to make assertions about the adequacy and appropriateness of client balances. The analytical procedure process consists of auditors creating independent account expectations and corroborating unusual fluctuations through obtaining and evaluating additional audit evidence. Prior analytical procedure research has found that knowledge of clients' unaudited account balances biases auditors' expectations towards the current year figures. However, this research has failed to examine the impact of biased expectations on the subsequent stages of analytical procedures. This dissertation assesses the full impact of biased account expectations on auditors' use of analytical procedures. I experimentally test the hypotheses of my dissertation through administering an experiment to senior level auditors. After inducing an account expectation bias that favors the client account balance in half the participants, I examine the auditors' cognitive investigation into an unusual account fluctuation. The results indicate that a biased account expectation negatively affects auditors' judgment quality. In particular, a biased expectation leads auditors to favor hypotheses and additional information that supports the proposition that the client's balance is reasonably stated. Alternatively, auditors with unbiased account expectations are more willing to consider all hypotheses and are able to identify the most pertinent additional information to the decision task. As a result of the different decision strategies employed, auditors who form unbiased account expectations are significantly more likely than auditors with biased account expectations to identify the correct relationship among the underlying data and the proposed hypotheses during a substantive analytical procedure.