Analytical procedures require that auditors develop and test hypotheses about possible fluctuations in a firm's financial data. Research in psychology suggests that the initial information ambiguity that exists prior to hypothesis generation may affect not only the initial hypothesis set, but...

This study examines an aspect of earnings management that we refer to as audit management. We define audit management as a client’s strategic use of diversions to decrease the likelihood that auditors will discover earnings management during the audit. Specifically, we examine whether...