How Audit Reviewers Respond to an Audit Preparer's Affective Bias - The Ironic Rebound Effect

36 Pages Posted: 16 Feb 2012 Last revised: 19 Jun 2014

See all articles by Michele Lynn Frank

Michele Lynn Frank

University of Pittsburgh - Katz Graduate School of Business; Miami University of Ohio

Vicky B. Hoffman

University of Pittsburgh - Katz Graduate School of Business

Date Written: May 9, 2014

Abstract

Prior research suggests that audit seniors’ judgments are sometimes biased by their affect toward (i.e., feeling of personally liking or disliking) client personnel. We examine how experienced audit reviewers respond when reviewing an audit preparer’s judgment that appears to be biased by the preparer’s affect toward a client’s controller. In our experiment, reviewers are provided with a preparer’s judgment that appears inconsistent with the audit workpapers. We then examine the effect of providing versus not providing reviewers with a cue about the preparer’s positive or negative affect toward the controller. We find that despite reviewers’ belief that affect biases a preparer’s judgment, reviewers who are informed of the preparer’s affect do not rely less on the preparer’s judgment. Instead, they actually rely more on the preparer’s judgment than do those who are not informed about the preparer’s affect. This result is consistent with Wegner’s (1994) ironic rebound effect, which predicts that sometimes when individuals are trying not to rely on information, they ironically rely on it more. Our findings suggest a potential limitation of the audit review process.

Keywords: audit review process, ironic rebound effect, affect, biased judgments

Suggested Citation

Frank, Michele Lynn and Frank, Michele Lynn and Hoffman, Vicky B., How Audit Reviewers Respond to an Audit Preparer's Affective Bias - The Ironic Rebound Effect (May 9, 2014). Forthcoming in The Accounting Review , Available at SSRN: https://ssrn.com/abstract=2005321 or http://dx.doi.org/10.2139/ssrn.2005321

Michele Lynn Frank (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States
412-770-4974 (Phone)

Miami University of Ohio ( email )

Oxford, OH 45056
United States

Vicky B. Hoffman

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States
412-648-1627 (Phone)

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