U.S. auditors are concerned that the greater imprecision in accounting standards under IFRS will lead to increased legal liability. We conduct an experiment with 749 mock jurors to examine how juries evaluate auditor conduct under precise and imprecise standards. We find that juries return more...

To effectively manage audit risk, auditors must anticipate potential litigation and reputation consequences associated with inaccurate accounting estimates. Our paper examines whether auditors correctly anticipate these consequences. We provided 57 manager- and partner-level auditors with case...

A primary goal of both financial reporting research and audit research is to understand the determinants of quality, and researchers in both areas have identified a wide set of variables that enhance or impair quality. In this paper, we define financial reporting quality and audit quality and...

To effectively manage audit risk, auditors must correctly predict the potential litigation and reputation consequences associated with inaccurate accounting estimates. Accurate predictions are critical because underestimation of negative consequences leads to excess legal exposure and...

In an experiment with 127 accounting professionals averaging over 18 years of experience, we investigate how two important characteristics related to auditing—prior audit negotiation outcomes and auditor expertise—affect (1) whether, on balance, the presence of an audit is more likely to...