Investors have strong economic incentives to engage in unbiased information search in order to maximize the expected value of their investments. I examine whether an investor's psychological preference for information that supports his past investment decisions dominates his economic incentive...

Consider the following puzzle: If earnings management is harmful to shareholders, why don't they design contracts that induce managers to reveal the truth? To answer this question, we model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone...

Prior research provides evidence that financial-statement users weight information less heavily in judgment when that information is provided in a less accessible format (e.g., information disclosed in a footnote or less important financial statement rather than being recognized on the income...

Practitioners and regulators are concerned that when auditors perceive management's attitude or character as indicative of low fraud risk, they are not sufficiently sensitive to high levels of incentive or opportunity risks in their overall fraud risk assessments. In this study, we examine...

Prior research indicates that audit and tax professionals' judgments are influenced by their client's preferences, both directly and indirectly (via information search). In an experiment with tax professionals as participants, we examine whether high practice risk (i.e., exposure to monetary and...

Practitioners and regulators are concerned that when auditors perceive management's attitude or character as indicative of low fraud risk, they are not sufficiently sensitive to high levels of incentive or opportunity risks in their overall fraud risk assessments. In this study, we examine...

This paper provides evidence that hyperlinking a firm's audited financial statements to unaudited information in a Web-based environment facilitates a blending of the unaudited information into the audited report. I obtain evidence of this blending effect using an experiment where investors...

Our purpose is to investigate the strategies an auditor will use to assess risk when planning for the provision of a type of assurance service. The assurance service that we model is the delivery of information from the auditor to an investor. Our primary objective is to explore the extent to...

Our purpose in this paper is to investigate optimal planning strategies for the provision of assurance services. Specifically, we have two objectives. The first is to explore the extent to which planning strategies that are employed in the provision of traditional auditing services (e.g.,...

SAS No. 78 requires that on every engagement auditors obtain a quot;sufficient understanding of internal controlquot; to plan the audit and determine the nature, timing and extent of audit testing (AICPA 1995). Two formats that have been used by auditors in the past to document their...