Perspective taking in auditor–manager interactions: An experimental investigation of auditor behavior

Bryan K. Church, Marietta Peytcheva, Wei Yu and Ong-Ard Singtokul

Accounting, Organizations and Society, 2015, vol. 45, issue C, 40-51

Abstract: We examine the effect of perspective taking on auditors’ ability to evaluate managers’ reported earnings and, in turn, contribute to high-quality financial reporting. Using an experimental-economics approach, we design two experiments to investigate auditor – manager interactions. In our first experiment, we manipulate auditors’ prior experience in the manager’s role. We predict and find that role-taking experience stimulates perspective taking, which allows auditors to more readily put themselves “in the manager’s shoes,” benefitting financial-reporting quality. In our second experiment, we examine dispositional perspective taking, focusing on individuals’ propensity to spontaneously take the viewpoint of another, as a dimension of personality. We predict and find that auditors with high perspective-taking disposition are better able to judge managers’ reported earnings than auditors with low perspective-taking disposition. Taken together, the results of our two experiments highlight the importance of perspective taking as a means to enhance auditors’ performance in strategic interactions with managers.

Keywords: Perspective taking; Role-taking experience; Individual difference; Experimental economics (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:45:y:2015:i:c:p:40-51

DOI: 10.1016/j.aos.2015.07.001

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