Withdrawn - The Effect of Staff Auditor Reputation and Reputation Management on Audit Quality Enhancing Actions

• In Event: Breakfast Research Forum

Abstract

We report the results of two experiments that examine whether having a good professional reputation facilitates performing quality audit work. Auditors have a professional obligation to conduct quality audits. However, research has demonstrated that audit quality enhancing actions (e.g., speaking up about issues, making client inquiries, exhibiting skepticism) come with associated potential personal costs. Drawing upon the Theory of Reputation in Organizations as well as Social Presentation Theory, we predict that auditors perceive that the risks associated with these actions vary based on the perceived reputation of the actor (i.e., lower risks associated with engaging in these actions when the auditor has a positive reputation), and that these perceptions will influence their decisions to act. We provide evidence that, when faced with an anticipated budget overage, auditors anticipate greater benefits to actively managing the supervisor’s expectations when the auditor has a more positive reputation with the supervisor, thus making that auditor less likely to engage in dysfunctional behavior to meet the budget. We also provide evidence that a positive reputation causes auditors to exhibit skeptical actions. Taken together, our experiments provide evidence that the quality of an auditor’s work is influenced by their perceived reputation with their supervisor.

Authors

• Emily Sokolosky Blum, University of Alabama-Tuscaloosa

• Richard Hatfield, University of Alabama-Tuscaloosa

• Richard W Houston, University of Alabama-Tuscaloosa