Ken T. Trotman

Associations between social responsibility disclosure and characteristics of companies

Abstract Surveys have shown a trend of increased corporate disclosure of social responsibility information. This paper suggests some reasons why companies provide social responsibility information and examines the effects of four variables (size, systematic risk, social constraints and management decision horizon) on the social responsibility disclosure practices of Australian companies.

The audit review process: A characterization from the persuasion perspective

Abstract In this paper, we describe the audit review process from a persuasion perspective. This perspective highlights that preparers have, and may take advantage of, opportunities to enhance their reputation by influencing the content and format of audit working papers (i.e. the working papers may be “stylized”). In turn, we highlight that reviewers may receive working papers containing messages intended to persuade the reviewer about the appropriateness of the work prepared and conclusions reached. We discuss the types of persuasion behaviors in which working-paper preparers may engage and the stylization that may result. In addition, we discuss potential behaviors by reviewers to cope with such behaviors and stylization. We make salient that to be effective, reviewers must anticipate persuasive behaviors of other audit team members, as well as the client. Further, we highlight that reviewers assume a working paper co-composer role. Finally, we suggest questions for future research related to persuasion behaviors and stylization, reviewer coping behaviors and the reviewers role as a co-composer.

The review process as a control for differential recall of evidence in auditor judgments

Abstract This experiment examines whether there are systematic offsetting differences in the manner in which initial decision makers and reviewers attend to information which ensure that evidence inconsistent with initial judgments is given adequate consideration. Differences in attention are proposed, which result in differential recall of evidence by the initial decision maker and reviewer and thus influence what knowledge initial decision makers and reviewers bring to their discussions and subsequent decisions. The results suggest that the review process can act as an effective control by increasing the chances that the implications of inconsistent evidence are considered.

Experimental judgment and decision research in auditing: the first 25 years of AOS

Abstract We review the papers published in Accounting, Organizations and Society ( AOS ) during the period 1976–2000 that report auditing judgment and decision experiments. We also review the AOS papers during the same period that attempt to influence the future directions of such studies. Our review is focussed on describing the characteristics and quantity of such papers and assessing their impact on the scholarly literature. We employ citation data and analysis as the primary means of judging scholarly impact and we draw comparisons with other leading research journals. Our inquiry and analysis reveals that AOS papers reporting auditing judgment and decision experiments have been a significant component of the audit judgment and decision literature, although the impact of the AOS papers is less than that of papers appearing in the other leading journals. For the AOS future-directions papers, however, we find a relatively large number and citations that compare favorably with citations of both papers reporting experiments and future-direction papers in other leading journals.

The impact of the review process in hypothesis generation tasks

Abstract This paper examines the performance of auditors in generating hypotheses in an analytical review case both prior to and after review. It partitions two possible sources of gain from the review process, namely the discussion effect and the rank effect. The discussion effect compares review groups with and without discussion. The rank effect compares seniors and audit managers. The study found that the review process results in more plausible hypotheses being generated. Discussion within the review process between reviewer and reviewee was found to be one source of gain from the review process. While there was no difference in the performance of the senior and manager reviewers, managers completed the task in less time.

Audit judgment research—Issues addressed, research methods and future directions

This paper outlines the purpose of judgment and decision making research in auditing. It examines the following areas of this research: policy capturing; heuristics and biases; information search, hypothesis generation and protocol analysis; knowledge and memory; group decision making; decision aids; and environmental and motivational issues. For each of these issues I outline the key research issues that have been addressed, the research methods used, a summary of past research and potential future research.

The Intersection of Family Business and Audit Research: Potential Opportunities:

Previous research has illustrated the importance of family businesses and significant differences between family and nonfamily businesses. Such differences will likely affect auditing for family versus nonfamily businesses. The authors emphasize experimental research labeled as “audit judgment and decision making research.” They argue that some aspects of people, tasks, and environment are different between family and nonfamily businesses and that these differences affect auditor judgments. A range of theoretical frameworks applicable to auditing research related to family businesses are considered. The authors suggest potential research opportunities related to auditor judgments, auditor—client negotiations, the demand for auditing, audit quality, corporate governance, and internal audit.

Order effects and recency: where do we go from here?

Previous studies of auditor judgments have examined whether the order in which information is received affects their judgments. In particular, these studies have considered whether there is a recency effect which occurs when the disconfirmatory/confirmatory evidence treatment results in a final judgment which is significantly higher than the confirmatory/disconfirmatory treatment. More recent studies have investigated the circumstances when recency effects exist and when they are mitigated. The results of the studies are mixed. After the addition of two further studies (Arnold et al., 2000; Monroe and Ng, 2000) in this edition of the journal, the results are still mixed. The paper outlines the possible explanations for the mixed results across studies and some issues that need to be addressed prior to collection of further empirical evidence.

Effects of Feedback and Task Predictability onTask Learning and Judgment Accuracy

This study examines the effect of different types of feedback on task learning and judgment accuracy across different levels of task predictability. The results of a laboratory study show that outcome feedback, alone, and in combination with task properties feedback, promotes judgment accuracy for both high and medium levels of task predictability. The beneficial impact of outcome feedback resulted from learning effects. Specifically , the outcome feedback improved judgment accuracy because of improved task knowledge and, in contrast to previous psychology research, it did not cause a deterioration in judgment consistency where task predictability was less than perfect. The results suggest that the negative effects of outcome feedback on judgment accuracy found in the psychology literature, where task predictability is less than perfect, may be limited in accounting settings where judges have experience with the task.

Configural Information Processing in Auditing: Further Evidence

Abstract An important issue in audit judgment research has been how auditors combine information in order to make judgments and, in particular, whether auditors ‘judgments involve configural cue usage. Some recent research (Brown and Solomon, 1990; 1991) has found that under certain conditions, many auditors were able to configurally process information. This paper extends this research by examining some conditions that may facilitate the development of auditors’ ability to configurally process available information. The study found that: (a) the proportion of auditors processing the information configurally was greater than chance; (b) for those that processed the information configurally, the form of the interaction was as predicted, that is, ordinal with a compensatory form; (c) increasing depth of processing by requiring subjects to provide explanations for their judgments did not have a significant effect on the number of auditors processing configurally; (d) the level of consensus was higher for aud...