Table 3 indicates that auditors are more trusting in

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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 significant (p 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.

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