Prior research provides evidence that auditors encounter difficulty in applying the error frequencies they have experienced to judgments of the probability that an audit objective is violated given a particular transaction cycle. This may occur because of a mismatch between the organization of...

Auditors must ensure that their audit plans budget sufficient time for key audit procedures. Research has shown that insufficient audit time budgets can be detrimental to audit quality. We examine whether framing audit procedures negatively (e.g., assess whether management's assumptions are not...

Investments that are classified as Level 2 within the fair value hierarchy account for approximately 92% of US banks' fair value assets. We report an experiment that examines how experienced auditors apply current PCAOB guidance when auditing portfolios of these assets. We hypothesize and find...

In the published proceedings of the first Journal of Accounting Research Conference, Vatter [1966] lamented that “Gathering direct and original facts is a tedious and difficult task, and it is not surprising that such work is avoided.” For the fiftieth JAR Conference, we introduce a...

In the published proceedings of the first Journal of Accounting Research Conference, Vatter [1966] lamented that “Gathering direct and original facts is a tedious and difficult task, and it is not surprising that such work is avoided.” For the fiftieth JAR Conference, we introduce a...

We report the results of two experiments that provide evidence that investors' risk judgments are affected by the numerical format used to describe outcomes within accounting disclosures. Consistent with prior research in psychology, investors assess higher risk in response to dollar-formatted...

SFAS No. 5 requires accrual of contingent losses which are deemed quot;probable.quot; This disclosure criterion is intended to be applied uniformly across a variety of contexts. We performed an experiment which examined whether audit managers' interpretations of the SFAS No. 5 probability...

We report survey evidence about 515 experiences that auditors have had with clients who they identified as attempting to manage earnings. This approach enables us to analyze separately managers' decisions about how to attempt earnings management (quot;EMquot;) and auditors' decisions about...

This paper uses recent experimental studies of financial accounting to illustrate our view of how such experiments can be conducted successfully. Rather than provide an exhaustive review of the literature, we focus on how particular examples illustrate successful use of experiments to determine...

Numerous archival papers indicate that investors can generate profit by following disciplined trading strategies that exploit the market's incomplete adjustment for various accounting data. Even assuming efficient markets in which securities are not mispriced, evidence suggests that both...