This study examines an aspect of earnings management that we refer to as audit management. We define audit management as a client’s strategic use of diversions to decrease the likelihood that auditors will discover earnings management during the audit. Specifically, we examine whether...

A perplexing yet persistent empirical finding is that individuals assess probabilities in words and in numbers nearly equivalently, and theorists have called for future research to search for factors that cause differences. This study uses an accounting context in which individuals are commonly...

We examine whether the effect of mandatory auditor rotation on audit quality depends on the mental frame auditors adopt in evaluating management representations. In practice, auditors can alternately frame their assessments of management representations in terms of their potential dishonesty...

Prior research shows that an audit supervisor’s active intervention in a subordinate’s judgment distorts that judgment. However, subordinates’ judgments are only one input into audit team judgments. How do supervisors finalize audit team judgments after actively intervening in their...

The “not documented, not done” requirements of PCAOB Auditing Standard 3 substantially increased auditors’ obligations to document their risk assessments. This study examines a potentially unintended consequence of such a requirement on auditors who have pressure to reach lenient,...

Internal auditors play an important role in influencing managers’ judgments. Yet, the practitioner literature indicates that, because internal audit lacks the client services incentives of external audit, internal auditors often adopt a “policeman approach” that can lead to negative...