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URL:
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https://ub-madoc.bib.uni-mannheim.de/2509
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URN:
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urn:nbn:de:bsz:180-madoc-25099
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Document Type:
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Working paper
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Year of publication:
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2007
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The title of a journal, publication series:
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Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
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Volume:
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07-59
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Place of publication:
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Mannheim
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Publication language:
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English
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Institution:
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School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
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MADOC publication series:
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Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
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Subject:
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330 Economics
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Classification:
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JEL:
M42 K22 C90 ,
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Subject headings (SWD):
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Wirtschaftsprüfung , Corporate Governance , Internes Kontrollsystem , Test
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Keywords (English):
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Accountability , Audit Committee , Auditor Independence , Client Retention Incentives , Experience , Professional Skepticism
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Abstract:
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The Sarbanes-Oxley Act of 2002 has transformed the institutional environment in the US by making the audit committee responsible for the appointment, compensation and oversight of the auditor. We examine whether this institutional change successfully resolves the alleged problem of an unconscious favoring of the management (Bazerman et al. 1997, 2002, 2006) by changing the effects of auditors’ economic incentives and psychological pressure. In our experimental design, we make use of the particular features of the German institutional setting as it enables us to manipulate the client of the auditor in a realistic and clear-cut way. 72 German auditors with at least two years of job experience participated in our experiment. Following Turner (2001), we distinguish in our analyses between belief tasks (e.g. evidence evaluation) and action tasks (e.g. audit opinion). Our findings imply that certain institutional features seem to be helpful in ensuring auditor independence. First, we find that auditors demonstrate professional scepticism in belief tasks. This seems to counteract any potentially negative effect of the acceptability heuristic in actions tasks. Second, experience helped auditors in coping with psychological pressure. Third, making the auditor accountable to a supervisory board was helpful in reducing the risk that financial considerations would impair auditor independence.
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Additional information:
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Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
Mannheim
07-59
[Working paper]
![[img]](https://madoc.bib.uni-mannheim.de/style/images/fileicons/application_pdf.png)
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