دانلود رایگان ترجمه مقاله تغییر چشم انداز در تعامل حسابرس و مدیر (نشریه الزویر 2015)

تغییر چشم انداز در تعامل حسابرس و مدیر: بررسی تجربی رفتار حسابرس

Perspective taking in auditor–manager interactions: An experimental investigation of auditor behavior

Abstract

We examine the effect of perspective taking on auditors’ ability to evaluate managers’ reported earnings and, in turn, contribute to high-quality financial reporting. Using an experimental-economics approach, we design two experiments to investigate auditor – manager interactions. In our first experiment, we manipulate auditors’ prior experience in the manager’s role. We predict and find that role-taking experience stimulates perspective taking, which allows auditors to more readily put themselves “in the manager’s shoes,” benefitting financial-reporting quality. In our second experiment, we examine dispositional perspective taking, focusing on individuals’ propensity to spontaneously take the viewpoint of another, as a dimension of personality. We predict and find that auditors with high perspective-taking disposition are better able to judge managers’ reported earnings than auditors with low perspective-taking disposition. Taken together, the results of our two experiments highlight the importance of perspective taking as a means to enhance auditors’ performance in strategic interactions with managers.

1 Introduction

This paper reports the results of two experiments designed to examine the effect of perspective taking on auditors’ ability to promote high-quality financial reporting. We define perspective taking as the capacity to entertain the psychological point of view of another (Davis, Conklin, Smith, & Luce, 1996). Our focus is on cognitive perspective taking, which entails understanding, as accurately as possible, another’s thoughts, attitudes, or concerns in a specific situation (Epley, Caruso, & Bazerman, 2006). We use an experimental-economics approach to examine auditor–manager interactions, where players have conflicting interests. Specifically, we investigate how perspective taking affects auditors’ assessment of managers’ reporting choices, including auditors’ propensity to identify and curtail reporting bias. We contend that successful perspective taking allows auditors to develop better mental models of clients’ earnings, which leads to enhanced financial-reporting quality (Peecher, Schwartz, & Solomon, 2007).

Prior studies suggest that effective perspective taking improves individuals’ judgments and decision making. Successfully taking another’s perspective can reduce anchoring effects, confirmation bias, actor–observer bias, and in-group favoritism (Galinsky & Mussweiler, 2001). Moreover, being able to take the perspective of one’s counterpart leads to more beneficial outcomes for self (Galinsky & Mussweiler, 2001). In an auditing context, Altiero, Kang, and Peecher (2014) document that auditors who are prompted to take an investor’s perspective, by completing a series of investor-minded tasks, provide higher-quality materiality judgments than auditors who are not prompted. Our study complements Altiero et al. (2014) by examining the linkage between perspective taking and auditor behavior in strategic interactions with managers.

In our first experiment, we examine whether role-taking experience stimulates auditors’ perspective taking. We contend that role-taking experience enhances auditors’ understanding of the manager’s viewpoint, which benefits auditors’ performance. Audit firms, especially the Big Four, have spent increasing amounts of resources to recruit former employees, commonly known as boomerangs (Badal, 2006; Deloitte, 2011). Firms’ recruiting directors assert that auditors who return, after having spent time in industry, bring back ‘‘stronger knowledge, a broader sense of experience, a broader skill set’’ to the firm (Hyland, 2006). Our experiment sheds light on an advantage that accrues to audit firms by hiring employees from industry.

We manipulate auditors’ prior experience in the manager’s role (experience versus no experience), examining its effect on auditors’ behavior. We predict and find that role-taking experience stimulates perspective taking. Auditors with role-taking experience more accurately estimate managers’ reported earnings, as compared to auditors without such experience, and in turn make better reporting decisions, which promotes high-quality financial reporting.