These two treatments allow me to investigate 1

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Unformatted text preview: ate audits. Although psychological costs increase in the strong group setting, economic incentives do not change. These two treatments allow me to investigate (1) whether managers’ noncredible communications exacerbate auditors’ susceptibility to bias (as Bazerman et al. [1997] imply); and (2) the extent to which group affiliation can neutralize auditors’ bias. This design is consistent with Kachelmeier’s (1996a, 1996b) recommendation that experimental research incorporate both economic and psychological forces. I report the decisions of 44 manager/auditor pairs: 11 pairs in each of the four settings (no-puffery/weak group; yes-puffery/weak group; no-puffery/strong group; yes-puffery/ strong group). University students participated as subjects. The results indicate that managers’ use of puffery in the yes-puffery settings significantly increases auditors’ willingness to trust managers, relative to the no-puffery settings. Auditors in the strong group settings trust managers significantly less than did auditors in the weak group settings. I...
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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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