How Does “Fit” Versus “Non-fit” Affect Audits of Estimates? The Compatibility Between Focus and Mindset Öffentlichkeit

Hong, Yue (Spring 2019)

Permanent URL: https://etd.library.emory.edu/concern/etds/4b29b723r?locale=de
Published

Abstract

Auditors frequently fail to critically evaluate management’s accounting estimates, jeopardizing

financial reporting quality (PCAOB 2017). I propose that one way to potentially improve audits

of estimates is to align an auditor’s focus (prevention/promotion) and mindset (concrete/abstract)

in a compatible way. I predict that judgment quality will be higher when the focus and mindset fit

versus do not fit each other, but I find the opposite. To reconcile my results with the typical findings

in non-judgment tasks that performance is higher under fit versus non-fit, I develop a new

prediction. I propose that whether judgment quality is higher under fit versus non-fit depends on a

third factor: auditors’ willingness to engage in the judgment task before receiving any

manipulations. I find that for auditors who are initially less engaged, judgment quality is higher

under fit versus non-fit, consistent with the typical findings in non-judgment tasks. However, for

auditors who are initially more engaged, judgment quality is higher under non-fit versus fit,

consistent with my main results. My study suggests that how “fit” versus “non-fit” affects

performance is more complex than previously thought. My study implies that firms should

consider auditors’ initial willingness to engage in the judgment task when using fit and non-fit to

improve audits of estimates.

Table of Contents

Introduction .....................................................................................................................................1

Theory and Hypothesis ...................................................................................................................7

Method ..........................................................................................................................................11

Results ...........................................................................................................................................14

Discussion .....................................................................................................................................24

Conclusions ...................................................................................................................................27

Appendix 1.....................................................................................................................................30

Appendix 2.....................................................................................................................................31

Appendix 3.....................................................................................................................................35

About this Dissertation

Rights statement
  • Permission granted by the author to include this thesis or dissertation in this repository. All rights reserved by the author. Please contact the author for information regarding the reproduction and use of this thesis or dissertation.
School
Department
Subfield / Discipline
Degree
Submission
Language
  • English
Research Field
Stichwort
Committee Chair / Thesis Advisor
Committee Members
Zuletzt geändert

Primary PDF

Supplemental Files