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...

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...