Auditor Judgment and Ego-Depletion

• In Event: Session D: Doctoral Student Papers

Abstract

Abstract: Ego-Depletion is a relatively recent psychological finding that attempts to explain systematic failures in self-control performance. Unger and Stahlberg (2011) state that individuals under ego-depletion become risk averse. Risk aversion for auditors would predict a systematic propensity to issue modified audit reports when ego-depletion becomes extreme. This study looks at the impact of ego-depletion on the risk behavior of auditors during busy season, when they are most likely to be depleted, and therefore most likely to exhibit risk aversion. My results provide evidence of greater risk aversion in audit outcomes controlling for macro-economic, audit firm and company-specific factors. These findings contribute to the outstanding audit literature indicating a widespread, systematic bias in auditor judgment and a need for possible changes in policy to mitigate these biases.

Author

• Joleen Kremin, Texas Tech University