King - THE ACCOUNTING REVIEW Vol 77 No 2 April 2002 pp...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
265 THE ACCOUNTING REVIEW Vol. 77, No. 2 April 2002 pp. 265–284 An Experimental Investigation of Self-Serving Biases in an Auditing Trust Game: The Effect of Group Affiliation Ronald R. King Washington University ABSTRACT: I report the results of an experiment designed to investigate the influence of noncredible communications and group affiliation on auditors’ for- mation of self-serving bias. I find that manager-subjects use noncredible com- munications to induce auditors to develop an unwarranted trust of managers (i.e., a biased judgment). However, the bias is neutralized when auditor- subjects belong to groups that create social pressure to conform to group norms. Thus, my finding calls into question the Bazerman et al. (1997) con- clusion that auditors cannot conduct impartial audits due to self-serving bi- ases resulting from repeated interactions between auditors and their clients. Keywords: self-serving bias; auditor independence; trust; groups. Data Availability: Data are available from the author. [W]e maintain that audit failures are the natural product of the auditor-client relation- ship. Under current institutional arrangements, it is psychologically impossible for au- ditors to maintain their objectivity; cases of audit failure are inevitable, even with the most honest auditors. —Bazerman et al. (1997) Helpful comments were received from Lynnea Brumbaugh-Walter, Bryan Church, John Dickhaut, Nick Dopuch, Mahendra Gupta, Steven Kachelmeier, Kathryn Kadous, Brian Mayhew, Claus Langfred, Bill Messier, Mark Peecher, Bill Rankin, P. K. Sen, Shyam Sunder, Ping Zhou, two anonymous reviewers, seminar participants at Georgia State University, The Ohio State University, University of Illinois Auditing Symposium, Washington University, 2001 Midyear Auditing meetings, and the First Asian Conference on Experimental Business Research held at Hong Kong University of Science and Technology. Research assistance was received from Amy Choy and Jim Holloway. Financial support from the Taylor Experimental Laboratory at the Olin School of Business is gratefully acknowledged. Submitted July 2000 Accepted September 2001
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
266 The Accounting Review, April 2002 I. INTRODUCTION I n a prominently cited commentary (Securities and Exchange Commission 2000), Baz- erman et al. (1997) argue that auditors suffer from an unconscious self-serving bias , and thus cannot conduct impartial audits. The bias arises because of auditors’ repeated close interactions with client management and their limited and distant interactions with investors. 1 Unconscious bias is particularly problematic because economic sanctions are less likely to mitigate it. In this paper, I report the results of an experiment designed to investigate the extent to which group affiliation, a noneconomic factor, can reduce self- serving biases in an audit trust game.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern