Unformatted text preview: rom the manager’s expected payoff. Thus, the data do not support either H1 (Nash) or H1 (Trust). These baseline ﬁndings serve
as a benchmark for testing the incremental inﬂuence of the puffery and group manipulations
in H2 and H3.
Results for H2: Comparing the NP Settings to the YP Settings
In the YP settings, managers could form reputations for trustworthiness during the
puffery-action phase by sending auditors a message indicating a willingness to cooperate
and then selecting a low fraud level. Managers did this in every round of the puffery-action
phase, except one, when no message was sent (details are available upon request).
Table 3 indicates that auditors are more trusting in the YP settings than in the NP
settings and the ANOVA results in Panel A of Table 4 show that the puffery effect is
0.03). Thus, managers’ puffery induced additional trust on the part of
auditors. Moreover, Panel B of Table 4 shows that auditors’ higher levels of trust were not
justiﬁed by managers’ fraud levels. Speciﬁcally, there is no signiﬁcant difference (p 0.15)
between managers’ fraud level in the NP and YP settings. These results are consistent with
H2 (SSB). Figure 2 depicts these results. The most striking ﬁnding shown in Figure 2 is 279 King—Investigation of Self-Serving Biases in an Auditing Trust Game FIGURE 2
Audit and Fraud Choices
Panel A: No-Puffery/Weak Group Panel B: Yes-Puffery/Weak Group 50% 50% 45% 45...
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This note was uploaded on 01/27/2014 for the course ACCY 405 taught by Professor Staff during the Fall '08 term at University of Illinois, Urbana Champaign.
- Fall '08