Robert H. Ashton

Students As Surrogates In Behavioral Accounting Research - Some Evidence

The use of students as subjects in behavioral accounting research is commonplace. Implicit in most studies that employ student subjects is the notion that students are reasonable surrogates for the real-world individuals of more direct interest to the researcher. Although several authors have noted potential problems involved in generalizing the results of such studies, little evidence exists on the adequacy of student surrogates in accounting. The purposes of this paper are (1) to analyze the existing evidence and (2) to provide some additional evidence on the surrogation issue relative to one specific type of behavioral accounting research.

Pressure and Performance in Accounting Decision Settings: Paradoxical Effects of Incentives, Feedback, and Justification

This paper shows that the positive effects on decision making of financial incentives, performance feedback, and the requirement to justify ones decisions to others can be undermined or even reversed by the availability of a decision aid. More specifically, in the absence of a decision aid, subjects achieved greater classification accuracy in a repetitive decision task when a monetary incentive was offered, or when feedback about past performance was provided, or when they were required to justify their choices, relative to the absence of these three variables. In contrast, when a statistically valid decision aid was available, the same incentive, feedback, and justification requirements resulted in lower classification accuracy, again relative to the absence of these three variables. These results are interpreted within a framework having two basic tenets. First, financial incentives, performance feedback, and a justifi-

Judgment and decision-making research in accounting and auditing

Contributors Series preface Preface Acknowledgements Part I. Overview: 1. Perspectives on judgement and decision-making research in accounting and auditing Robert H. Ashton and Alison Hubbard Ashton Part II. Judgment and Decision-Making Research Involving Users of Accounting Information: 2. Decision-making research in managerial accounting: return to behavioural-economics foundations William S. Waller 3. Experimental incentive-contracting research in management accounting S. Mark Young and Barry Lewis 4. Judgement and decision-making research in financial accounting: a review and analysis Laureen A Maines 5. The individual versus the aggregate Joyce Berg, John Dickhaut and Kevin McCabe Part III. Judgement and Decision-Making Research Involving Auditors of Accounting Information: 6. Judgment and decision-making research in auditing Ira Solomon and Michael D. Shields 7. The role of knowledge and memory in audit judgement Robert Libby 8. Research in and development of audit-decision aids William F. Messier Jr Part IV. Conclusion: 9. Twenty years of judgement research in accounting and auditing Michael Gibbins and Robert J. Swieringa References Index.

Effects of justification and a mechanical aid on judgment performance

Abstract This study examines the effect on judgment performance of an explicit justification requirement and of having available the recommendations of a mechanical judgment aid. The subjects are professional auditors, and the task is the classification of industrial bond issues into rating categories that reflect differential levels of financial quality. It is found that both the justification requirement and the availability of the mechanical aid are associated with significantly greater judgment accuracy which can be traced to significantly greater consistency. Both factors are also associated with significantly greater consensus, or agreement among judges, which can be important when accuracy cannot be assessed. Several directions for further research on justification and judgment aiding in applied contexts are discussed.

Combining the judgments of experts: How many and which ones?

Abstract R. M. Hogarth (1978, Organizational Behavior and Human Performance, 21, 40–46) presents an analytical model which, under certain conditions, may be useful for estimating both the number of experts to include in a staticized group and which experts. This paper reports a study of an important real-world judgment task used to evaluate (1) the extent to which the specified conditions hold and (2) the effect of violations of the conditions on the ability of the model to approximate the actual empirical validities that result from forming such groups. The results indicate that, although the specified conditions hold only moderately well, the model suggested by Hogarth provides a remarkably good approximation to the actual empirical validities of the staticized groups.

Evidence-responsiveness in professional judgment: Effects of positive versus negative evidence and presentation mode

Abstract Professional auditors participated in four belief-revision experiments that examined the differential responsiveness of their revisions to positive and negative evidence and the impact of presentation mode on their revisions. In two auditing and two nonauditing tasks, the auditors were more responsive to negative than to positive evidence, and revised their beliefs to a greater extent with sequential than with simultaneous evidence presentation. We argue that important aspects of the education and training of auditors, and of the legal and professional environment in which they work, may be expected to distinguish their approach to evidence evaluation from that of other groups. This argument is supported by two additional experiments which show that another group of professional subjects (business executives) do not exhibit direction-of-evidence and presentation-mode effects in the same nonauditing tasks. Implications for belief revision in professional settings and directions for further research are discussed.

Feedback And Prediction Achievement In Financial Analysis

Accounting numbers are used by individual decision makers in a variety of decision tasks that have several features in common. First, the decision maker uses accounting numbers to predict a future value (or judge a current value) of some decision-relevant variable. Second, the decision maker must integrate several pieces of information (or cues) in order to make a prediction. Third, each cue is probabilistically related to the variable of interest (or criterion). Fourth, some cues are more highly associated with the criterion than others. Finally, the probabilistic nature of the cue-criterion associations prevents perfect prediction. Predictions of corporate bankruptcy (Libby [1975]) and of future stock prices (Wright [1977]) are examples of decision tasks that embody these features. Three methods have been suggested for improving the decision makers performance in such tasks (e.g., Libby [1976]). (1) The cues on which predictions are based may be changed. (2) The decision maker may be replaced by a model that represents his or her prediction strategy, or by a model of the cue-criterion relationships. (3) The decision maker may be trained, perhaps with the use of feedback information, to make improved predictions. The third strategy is pursued in many applied settings (e.g., in tasks involving financial analysis). Resources are expended (by corporations, financial institutions, security analysts, etc.) to train people to perform financial analysis tasks and to improve their performance over

A Descriptive Study of Information Evaluation

This paper reports a descriptive study relevant to one component of the information evaluation model-the evaluators probability distribution over actions the decision maker might choose. Specifically, an experiment investigated the ability of information evaluators to acquire knowledge about a decision makers model and to apply the acquired knowledge to the evaluators own decision making. The evaluators ability to acquire and apply decision-model knowledge was assessed over three simulated decision makers who differed in predictability, over three types of evaluators who differed in educational level, and over two types of feedback information that differed in specificity. The following section discusses two paradigms-the information evaluation model (e.g., Demski [1972]) and the lens model (e.g., Ashton [1974]) -that provide conceptual and methodological foundations for the study. That section is followed by a description of the experimental task, subjects, and hypotheses. Finally, the results are presented, and several implications for information evaluation and issues for further research are discussed.

Deviation-amplifying feedback and unintended consequences of management accounting systems

Abstract The concept of deviation-amplifying feedback is introduced, and its potential for providing insights into unintended consequences of management accounting systems is discussed. Specific applications of deviation-amplifying feedback to various aspects of a budgetary control system are explored. Then more general implications of deviation-amplifying feedback for management accounting systems are elaborated.

A review and analysis of research on the test–retest reliability of professional judgment

This paper analyzes existing research on the test–retest reliability of human judgment, i.e. the extent to which a judge makes identical judgments when presented with identical stimuli on two occasions. Only research involving professional judges who make experimental judgments in a reasonable analog of their everyday experience is included. Studies of both internal consistency reliability and temporal stability reliability are analyzed (where the former refers to the inclusion of repeat stimuli in the same experimental session, and the latter refers to the repeating of the experimental task from a few days to several months later). It is found that (1) the test–retest reliability literature is concentrated in four substantive judgment areas (medicine/psychology, meteorology, human resources management, and business), (2) the literature is extremely variable in terms of research approach/design, the determinants or correlates of test–retest reliability that have been studied, and the quality of the execution and analysis, and (3) mean test–retest reliability differs across both substantive judgment areas and the internal consistency versus temporal stability distinction. An inescapable conclusion from the analysis is that our knowledge of this fundamental property of human judgment is quite meager. Therefore, the paper concludes with suggestions about future research that would address test–retest reliability more systematically. Copyright