The Influence of Information Order Effects and Trait Professional Skepticism on Auditors’ Belief Revisions: A Theoretical and Empirical Analysis (Auditing and Accounting Studies)

Kristina Yankova addresses the question of what role professional skepticism plays in the context of cognitive biases (the so-called information order effects) in auditor judgment. Professional skepticism is a fundamental concept in auditing. Despite its immense importance to audit practice and the voluminous literature on this issue, professional skepticism is a topic which still involves more questions than answers. The work provides important theoretical and empirical insights into the behavioral implications of professional skepticism in auditing. Contents Belief Revision and Information Order Effects Professional Skepticism Empirical Analysis Target Groups Researchers and students in the fields of accounting and auditing Practitioners in these areas The Author Dr. Kristina Yankova completed her doctoral studies under the guidance of Prof. Dr. Annette Köhler at the Chair of Accounting and Auditing at the Mercator School of Management, University of Duisburg-Essen Foreword 6 Acknowledgements 7 Table of Contents 8 List of Abbreviations 13 List of Figures 18 List of Tables 19 List of Symbols 20 1 Introduction 22 1.1 Motivation and Objectives 22 1.2 Organization of the Thesis 25 2 Broad Theoretical Background 27 2.1 Need for Adoption of a Psychological Lens in Behavioral Research 27 2.1.1 Normative Economic Theory and Its Behavioral Limitations 27 2.1.2 Cognitive Psychology and its Contribution to Explaining Human Behavior 30 2.2 The Architecture of Cognition 31 2.3 Information Processing Approach 36 2.4 Auditor Judgment 37 2.4.1 Preliminaries 37 2.4.2 Determinants 42 3 Belief Revision and Information Order Effects 71 3.1 General Remarks 71 3.2 The Belief-Adjustment Model 74 3.2.1 Foundations 74 3.2.2 Model Specification 82 3.2.3 Model Implications and Predictions 85 3.2.4 Model Testing and Validation 89 3.2.5 Critical Evaluation 93 3.3 Relevance of Belief Revision in Auditing 94 3.4 Empirical Evidence on Information Order Effects in Auditing 96 4 The Concept of Professional Skepticism 103 4.1 General Remarks 103 4.2 Definitions and Views of Professional Skepticism 105 4.2.1 Skepticism in a General Sense 105 4.2.2 Professional Skepticism in a Normative Sense 110 4.2.3 Professional Skepticism as in the Auditing Literature 116 4.3 The Nelson Model 123 4.3.1 Model Overview 123 4.3.2 Determinants 125 4.4 Hurtt’s Notion of Trait Professional Skepticism and the Hurtt Scale 149 4.4.1 General Remarks 149 4.4.2 Constituent Elements of Trait Professional Skepticism 151 4.4.3 Scale Development and Validation 159 4.4.4 Empirical Evidence 164 4.5 The Influence of Trait Skepticism on Auditors’ Belief Revisions 166 5 Empirical Analysis 171 5.1 Research Method 171 5.2 Experimental Design 173 5.3 Research Instrument 174 5.3.1 Development and Preliminary Validation 174 5.3.2 Pretest 176 5.3.3 Experimental Materials and Procedures 181 5.3.4 Administration 184 5.4 Participants 185 5.5 Results 188 5.5.1 Manipulation Checks 188 5.5.2 Demographics 191 5.5.3 Preliminary Analyses 195 5.5.4 Hypothesis Testing 199 5.5.5 Additional Explorative Analyses 213 6 Conclusion 218 6.1 Summary and Discussion 218 6.2 Limitations and Directions for Future Research 221 Appendix 1 226 Appendix 2 228 Appendix 3 240 Appendix 4 256 References 257 List of Normative Rules and Regulations 320 Kristina Yankova addresses the question of what role professional skepticism plays in the context of cognitive biases (the so-called information order effects) in auditor judgment. Professional skepticism is a fundamental concept in auditing. Despite its immense importance to audit practice and the voluminous literature on this issue, professional skepticism is a topic which still involves more questions than answers. The work provides important theoretical and empirical insights into the behavioral implications of professional skepticism in auditing. Contents Belief Revision and Information Order Effects Professional Skepticism Empirical Analysis Target Groups Researchers and students in the fields of accounting and auditing Practitioners in these areas The Author Dr. Kristina Yankova completed her doctoral studies under the guidance of Prof. Dr. Annette Köhler at the Chair of Accounting and Auditing at the Mercator School of Management, University of Duisburg-Essen Front Matter....Pages I-XXVI Introduction....Pages 1-5 Broad Theoretical Background....Pages 6-49 Belief Revision and Information Order Effects....Pages 50-81 The Concept of Professional Skepticism....Pages 82-149 Empirical Analysis....Pages 150-196 Conclusion....Pages 197-204 Back Matter....Pages 205-302