This study examines the effect of timing (gradual versus immediate) and direction (tax increase or decrease) of a tax change on taxpayer behavior. Specifically, we focus on capital gain tax changes and preferences for investment in riskier assets. We run an experiment with 117 participants who...

Although skepticism is widely viewed as essential to audit quality, there is a debate about what form is optimal. The two prevailing perspectives that have surfaced are ‘neutrality’ and ‘presumptive doubt’. With neutrality, auditors neither believe nor disbelieve client management. With...

Auditing standards task auditors with collecting sufficient appropriate evidence to form audit judgments. Yet cognitive psychology documents a robust finding in which people evaluate a bundle of relevant, directionally consistent evidence as though averaging the strength of the components. In...

The Securities and Exchange Commission (SEC) sanctioned investor-paid rating agency Egan-Jones for falsely stating that it did not know its clients' investment positions. The SEC's action against Egan-Jones raises the broad question whether knowledge of clients' investment positions creates a...

Auditing standards task auditors with collecting sufficient appropriate evidence to form audit judgments. Yet cognitive psychology documents a robust finding in which people evaluate a bundle of relevant, directionally consistent evidence as though averaging the strength of the components. In...