advanced auditing syllabus · Web view(please note these hours are also for my M.Acc. students); and by appt. (also, you may email me at any time) Emergencies:Call (213) 740-4321

UNIVERSITY OF SOUTHERN CALIFORNIALeventhal School of Accounting

Fall 2014

ACCT 602 (Section 14316R) – Judgment and Decision-Making Research in Accounting

Instructor: Professor Sarah Bonner – Ernst & Young Professor; Professor of Management and Organization

Class Hours: 9:00 – 11:50 Wed (HOH 506)Office: HOH 622Office Phone: (213) 740-5025Email Address: [email protected] Hours: 2:00 – 3:00 TTh, 12:00 – 2:00 Wednesday (please note these hours

are also for my M.Acc. students); and by appt. (also, you may email me at any time)

Emergencies: Call (213) 740-4321 (for a personal emergency) or (213) 740-9233 or listen to 91.5 KUSC radio (for emergency information)

USC Information: (213) 740-2311Prerequisites: Departmental approvalCorequisites: None

I. COURSE DESCRIPTION

This is a Ph.D.-level survey course on judgment and decision-making (JDM) research in accounting. The overall objective of the course is to provide you with the tools needed for educated consumption of the JDM literature in accounting.1 In addition, because some of you are new to reading research papers, the first few weeks of the course will cover fundamental principles of research design. These principles pertain to all types of accounting research, not just JDM research, and, therefore, this information should be pertinent to other courses as well. The JDM section of the course is organized as follows. First, we consider why one would want to study JDM in accounting contexts and do so using psychology theories. Then we consider how one would conduct research on JDM in accounting. Third, we will discuss how one measures JDM “quality,” and whether differences in quality matter (in an economic sense). Fourth, we will discuss variables related to the person, task, and environment that affect JDM quality. The task section will cover variables related to accounting per se. Fifth, we will examine whether users of accounting-related JDM understand these determinants of quality, and the impact of solutions for low-quality JDM. Finally, we will have a section on new directions in JDM research.

1 Students interested in conducting research on JDM (or on any other “behavioral” topics) obviously need training beyond that provided by this course, specifically in psychology and methods.

II. COURSE GOAL AND LEARNING OBJECTIVES; COURSE FORMAT

The overall goal of this course is to provide you with the tools needed for educated consumption of the JDM literature in accounting. Additionally, as mentioned above, this semester’s course will briefly cover research design issues. Subsumed under this goal are several specific learning objectives and desired outcomes of this class:

Research design objectives:

You should gain factual knowledge of important research terminology , including but not limited to: theory, causality, method, internal validity, external validity, construct validity, construct, variable, sample, measurement, and control.

-- The desired outcome for this objective is that you be able to define and describe these concepts.

You should learn fundamental principles related to doing research . These fundamental principles are among the specific skills and competencies needed by researchers. In particular, we will learn these principles by learning a conceptual framework that embodies key principles of research. These principles include those related to proper measurement of conceptual variables, proper control for alternative explanations, and the like.

-- The desired outcome for this objective is that you be able to describe these principles.

You should learn to apply the above terminology to novel situations . This learning would include the ability to recognize, based on your understanding of terminology, whether something you read is a theory, a construct, a variable, etc. You should also begin to learn to apply the above principles to novel situations -- this would include determining whether a researcher has properly developed hypotheses, properly measured variables, properly controlled for alternative explanations, etc.

-- The first desired outcome for these objectives is that you be able to classify “good” (or “present”) vs. “bad” (“absent”) examples of important research concepts, e.g., whether a hypothesis development section in a paper does or does not contain theory. An additional desired outcome is that you can begin to demonstrate the application of research principles to others’ and your own work. You obviously cannot completely learn to do this in three weeks – this is why my objective is that you can begin to do these things.

JDM objectives:

You should gain factual knowledge of important constructs related to the psychology of judgment and decision-making, including but not limited to: judgment, decision, consensus, knowledge content, knowledge organization, abilities, cognitive processes, information search, retrieval, recall, recognition, problem representation, hypothesis generation, hypothesis evaluation, heuristics, task complexity, framing, presentation format, and decision aid.

-- The desired outcome for this objective is that you be able to define and describe these constructs.

You should gain factual knowledge of important issues related to judgment and decision-making research in accounting, including but not limited to: an understanding of the importance of psychology-based JDM research in accounting, a series of questions that can be used to organize the field of JDM research, an appreciation for the issues related to measuring JDM quality, and an understanding of the advantages and disadvantages of various methods that can be used to study JDM.

-- The desired outcome for this objective is that you be able to describe and discuss these issues.

You should learn fundamental principles (i.e., research findings) of judgment and decision-making behavior in accounting settings, including, for example, the pervasive finding that JDM is influenced by irrelevant changes in task format (I do not provide a list here as the list would be too lengthy). The course will be structured around a conceptual framework that articulates a logically sequenced series of research questions. This conceptual framework will serve as an organizing tool for learning key research findings. That is, you should be able to organize your knowledge about research findings around the series of questions. To facilitate learning these fundamental principles, we will engage in two other activities. First, each class will begin with a lecture that presents the key findings from psychology related to the topic of the day. Second, we will read papers that present examples of these findings in accounting settings.

-- The desired outcome for this objective is that you be able to describe these key research findings.

You should begin to learn to apply the above terminology to novel situations . This learning would include the ability to recognize, based on your understanding of terminology, whether, for example, a human capability is an ability or an acquired type of knowledge.

-- The desired outcome for this objective is that you begin to be able to classify “good” (or “present”) vs. “bad” (“absent”) examples of important psychological constructs relevant to JDM, e.g., whether what an author describes in a paper truly is a type of “knowledge.” I have found this to be a very important skill in evaluating JDM papers in accounting because a surprising number of authors use psychological constructs either very loosely or worse, incorrectly.

You should also begin to learn to apply the above principles (research findings) to novel situations. This objective pertains to being able to determine whether researchers have properly represented prior findings in development of their hypotheses. You are only expected to have very rudimentary skills in this area as several psychology courses would be required to have high-level skills.

-- The desired outcome is that you can begin to be able to recognize obvious deficiencies in representations of previous research findings in JDM studies in accounting.

You should begin to learn how to analyze and critically evaluate JDM research in accounting. This beginning will come partially from learning and applying the conceptual framework that organizes this course, the terminology, and the key research findings. However, I also expect that you will begin to have an appreciation for the factors that specifically affect various types of validity in JDM studies, e.g., the key correlated omitted variables that arise.

-- The key desired outcome for this objective is that you begin to be able to evaluate the quality of a JDM research study in accounting by understanding the terminology, the key issues JDM studies do and should address, the key research findings, and the unique threats to validity.

To achieve the above learning objectives, I will employ a combination of background readings, interactive lectures, and student presentations of research articles. With the exception of the first two class periods which will consist mostly of lecture and discussion of a few questions, each class period will begin with a short lecture that provides a framework for the area of research. I believe this to be of the utmost importance as a great deal of research has demonstrated the importance to learning of having a framework prior to digesting the material. Further, frameworks can be learned through instruction much more rapidly and accurately than they can be learned through experience. After the short lecture, the primary readings will be presented using the Kinney and Libby methods for analyzing and critiquing papers.

IV. REQUIRED TEXTS, READINGS, AND OTHER TOOLS; RECOMMENDED OR ADDITIONAL READINGS

The required texts for this course are:

S. Bonner, Judgment and Decision Making in Accounting. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2008 (ISBN 0138638950)

W. Shadish, T. Cook, and D. Campbell, Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, Massachusetts: Houghton Mifflin Company, 2002 (ISBN 0395615569)

D. Kahneman. Thinking, Fast and Slow. New York, NY: Farrar, Straus and Giroux, 2011 (ISBN 0374275637)

Other materials will consist of journal articles, book chapters, and working papers. You will be asked to download these materials from Blackboard.

For each class period, there will be background readings (denoted with a “B” in the list of reading assignments) and primary readings. The background readings generally are review papers or book chapters that cover the topic of interest. These background readings are considered mandatory reading, but will not be discussed per se during class. However, you will be expected to understand the critical points of these articles, which will be reinforced through lectures. In other words, this material is fair game for qualifying exams.

The primary readings are the ones you will present or review. For these readings, I have attempted to choose recent papers in areas where research still is quite active and more classic papers in areas where it is not. I do not warrant that the papers I have chosen are the best in any given area. Further, many of the topic areas have been researched quite extensively, so the papers you read may only begin to scratch the surface of the area. My book should provide a reasonable reference for other papers in the area. Finally, I have attempted to choose papers on topics other than financial accounting where possible; however, the bulk of the recent literature relates to these topics. I consider this to be only a minor issue since the course is focused on JDM rather than financial JDM.

For each topic we cover, there are hundreds of additional readings. Thus, I have not listed additional readings for each session, as this would be overwhelming. However, you should feel free to inquire further about any topic in which you have a particular interest and, again, refer to the psychology articles referenced in my book.

V. GRADE COMPOSITION AND GRADING EXPECTATIONS

Total points for this course are 1000. Your letter grade will be determined based on your relative performance (vis-à-vis your peers).

The 1000 points for this course are divided as follows:

Component PointsWritten assignmentGeneral class participationOral presentations of articles (6 total)Oral reviews of articles (6 total)Proposal

7575

300 300

250 Total 1000

Written Assignment

75 points are allocated to one written assignment, which is due on September 19 and is related to the research design section of the class. I will grade this assignment based on whether you completed all parts of the assignment, the effort you put into the assignment as exhibited by your thoroughness and depth of thought, and, to a lesser extent, accuracy of application of concepts. You will be asked to share portions of your assignment with the class, so please be prepared to write your answers on the board or discuss them verbally (in other words, you do not need to prepare a formal presentation, but rather simply be prepared to discuss your written work). Please type this assignment. The details of the assignment are as follows:

Complete the manuscript evaluation form for each of the following two articles:

Schrand, C., and Walther, B. “Strategic Benchmarks in Earnings Announcements: The Selective Disclosure of Prior-Period Earnings Components,” The Accounting Review (2000), pp. 151-177.

Krische, S. “Investors’ Evaluations of Strategic Prior-Period Benchmark Disclosures in Earnings Announcements,” The Accounting Review (2005), pp. 243-268.

While completing the form for the second paper, make note of key differences between your answers here and those for the paper above (in other words, think about general differences in the answers that might appear on a form for a paper that uses an experiment versus a paper that analyzes archival data). You do NOT need to write up this part to turn in – just think about it for discussion purposes.

General Class Participation

The 75 points allocated to general class participation relate to your discussion and questions related to your classmates’ presentations and reviews of articles, and your questions and discussion related to my lectures. My expectations for this participation grade are that you will have read all the readings (background and to-be-presented) thoroughly and be prepared to ask questions and provide discussion points. Specifically, you are expected to generate at least one concern/question about each study that is going to be presented. I will grade you each day on a 5-point scale, then convert your total points to a 75-point standard at the end of the semester. The main criterion here again is effort, as exhibited by thoroughness of preparation and depth of thought. In discussions, there typically is no “right answer,” so very little weight will be placed on an accuracy criterion unless you clearly are saying things just to be saying something.

Oral Presentations and Reviews of Articles

600 points will come from presentations and reviews of assigned JDM articles (300 points for presentations and 300 points for reviews). You have been assigned to be a presenter (designated “P”) for 6 articles and a reviewer (designated “R”) for 6 articles. Thus, two people have responsibility for each article; however, each of you is to assume a different role for the paper. My expectations for your performance are as follows.

The person who is assigned to be the presenter of a paper is supposed to take on the role of the author, i.e., act as if he or she has a personal investment in the paper and, consequently, mostly present its good points. However, the presenter also must be prepared to defend against any criticisms brought by the reviewer of the paper, as well as to answer any questions posed by other members of the audience, so you must be fully aware of any deficiencies in the paper as well (that is, don’t just skim through the paper looking for good points). The presenter should plan to spend about 15 minutes discussing the paper’s main contributions, research questions, method and data analysis techniques, variables, findings, etc.

Because your presentation will be facilitated greatly if you fill out the “Manuscript Evaluation Form” as well as the “Libby boxes” for each paper you are presenting, you must fill these out and hand them in to me prior to presenting. Each oral presentation of a paper is worth 50 points in total. I will evaluate you as to the content and form of your presentation. Evaluation of content will include an assessment of thoroughness, accuracy/understanding of concepts and details in the paper, etc. Evaluation of form will include an assessment of your speaking skills, organization, etc. I also will evaluate the quality of your filled-out manuscript evaluation form and Libby boxes as to completeness, accuracy, etc. You may present using any format you deem appropriate, although I suggest that you obtain advice from older Ph.D. students as to appropriate presentation styles. Finally, you will have about 5 minutes to respond to your reviewer’s comments.

The person who is assigned to be the reviewer of a paper is supposed to take on the role of a journal reviewer assuming the paper has been submitted to a top journal in accounting, i.e., act as if he or she is NOT the author of the paper. This means that your main goal should be to assess the contribution of the paper to the accounting literature, keeping in mind that sometimes contributions come in the form of new data, new theories, new methods or data analysis techniques, new variables, etc. as opposed to new findings regarding existing theories, which is likely the most typical contribution. Of course new data, new theories, new methods or data analysis techniques, and new variables per se do not necessarily mean that a paper is of high quality – for example, if someone submitted a paper to a top journal that examined the impact of the quality of paper used for printing annual reports on investor judgments, it is fairly likely it would be rejected despite the fact that “quality of paper” would be a new variable. Similarly, a paper that used a new data analysis technique because of purported flaws in older techniques, but obtained the same findings as previous papers likely would not be considered a major contribution. And, of course, new findings regarding existing theories do not always constitute a “major contribution.” Sometimes the new findings are so miniscule that no one really cares. The reviewer should plan to spend about 15 minutes constructively pointing out the paper’s weaknesses as well as praising it where appropriate (although the praising part should be brief). For example, if the paper has done an excellent job at theory development, you should say so. Along with your constructive criticism, you should offer suggestions for improvement. While it may seem like a daunting task to be able to find weaknesses in already published papers, TRUST ME – there will be plenty to find.

As is the case with the presenter role, it probably goes without saying that your review will be facilitated greatly if you fill out the “Manuscript Evaluation Form” as well as the “Libby boxes” for each paper you are reviewing, although, in the case of reviews, I will not collect these forms. Each oral review of a paper is worth 50 points in total. I will evaluate you as to the content and form of your review. Evaluation of content will include an assessment of thoroughness, accuracy/understanding of weaknesses, as well as good points, etc.. Evaluation of form will include an assessment of your speaking skills, organization, and your professionalism while criticizing others’ work. You may review using any format you deem appropriate.

PLEASE NOTE: I reserve the right to change the manner in which you make presentations and reviews at some point during the semester. If I choose to do so, I will issue new guidelines.

Proposal

This assignment (worth 250 points) requires that you generate a JDM research question, explain why it is important (both practically and theoretically), briefly develop theory, and propose how you would study the question. The “how” part of the proposal should include a method (most likely an experiment or archival data analysis, but others are acceptable), proposed measurement or manipulation of the variables, and proposed control mechanisms for noise and correlated omitted variables. The length of the proposal should be no more than 10 pages. The proposal will be due after the class is over (sometime in January). However, I expect that you will show me your preliminary JDM question by Monday, November 17. I will read your entire proposal ONCE before it is due – please use this opportunity judiciously.

Honor Code Expectations

Finally, while I expect that Ph.D. students will never violate any of our academic integrity standards, I am obligated to provide you with my policies. With regard to the final exam, sharing information with other students about the contents of or answers to the exams is considered a violation of the Honor Code, and will result in an “F” for the class. Additionally, using reference sources of any sort on the final is a violation of academic integrity and will result in an “F” for the class. With regard to oral presentations assignments, my policy is that all presentations are to be completed individually. It will be considered an Honor Code violation if any discussion about the presentation has occurred among students. If you have questions about an assignment, please direct them to me. In other words, all work in this class is to be your own!

Statement for Students with Disabilities:

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to me as early in the semester as possible. DSP is located in STU 301 and is open 8:30 A.M. – 5:00 P.M., Monday through Friday. The phone number for DSP is (213) 740-0776.

VI. INDIVIDUAL CLASS TOPICS AND ASSIGNMENTS

Class No. Date Topics Assignments1 8/27 Introduction to scientific research and

accounting research; introduction to framework and concepts for understanding empirical accounting research

Readings:Deetz, 1995 (B)Kerlinger and Lee, 2000, Ch. 1 (B)Kinney, 1986 (B)Libby, 1981, pp. 11-15 (B)Sutton and Staw, 1995 (B)Whetten, 1989 (B)Manuscript evaluation form (B)

Assignment:None

2 9/3 Causality and validity; research designs; validity issues in key designs and methods used in accounting research

Readings:Brewer, 2000 (B)Das, Levine, and Sivaramakrishnan, 1998 (B)Kerlinger and Lee, 2000, Chs. 18-20 (B)Shadish, Cook and Campbell, 2002, Chs. 1-3 (B)Simon and Burstein, 1985, Ch. 35 (B)

Assignment:None

3 9/10 Operationalizing constructs and other elements of research (e.g., sample selection) – effects on various validities

Readings:Carmines and Zeller, 1979, Chs. 1-4 (B)Kerlinger and Lee, 2000, Chs. 3, 8, 26 (B)Kinney, 1986 (review if you feel you need to) (B)Shadish, Cook, and Campbell, 2002, Chs. 2, 3, 8 (review Chs. 2 and 3 if you feel you need to) (B)Simon and Burstein, Ch. 9 (B)

Assignment:None

4 9/17 Using the manuscript evaluation form

Wrap-up of research design issues

Readings:None

Written Assignment:Written assignment (see page 6 of syllabus)

Class No.

Date/ Time Topics Assignments

5 9/24 Overview of JDM research in accounting

Readings:Bonner, 2008 – Chs. 1, 2 (B)Bloomfield, 2010 (B)

Tan and Libby, 1997 (P1; R2)Hong and Kubik, 2003 (P3; R4)Srinivasan, 2005 (P5; R1)

Written and Oral Assignment:Prepare presentations or reviews for articles

6 10/1 Overview of human JDM Readings:Bonner, 2008 – Ch. 5, pp. 107-110; Ch. 7 – pp. 200-202 (B)Kahneman, 2011 – Introduction, Chs. 1-3 (B)Evans, 2008 (B)

Hackenbrack and Nelson, 1996 (P2; R3)Barber and Odean, 2008 (P4; R5)Farrell, Goh, and White, 2014 (P1; R2)


7 10/8 Person variables that affect JDM (knowledge, abilities, etc.)

Readings:Bonner, 2008, Chs. 3, 4, 5 – pp. 120-124 (B)Kahneman, 2011, Chs. 4, 7 (B)

Bonner and Lewis, 1990 (P1; R3)Erkens and Bonner, 2014 (P2; R5)Majors, 2014 (P3; R4)


Class No.


8 10/15 Person variables that affect JDM (specific cognitive processes)

Readings:Bonner, 2008 – Ch. 5, pp. 110-120, 124-156 (B)Tversky and Kahneman, 1974 (B)Shah and Oppenheimer, 2008 (B)

Libby, 1985 (P4; R1)Bonner, Walther, and Young, 2003 (P5; R4)Rennekamp, 2012 (P3; R2)


9 10/22 Task variables that affect JDM (overview, complexity, features of information, framing)

Readings:Bonner, 2008 – Ch. 6 – pp. 157-188 (B)Kahneman & Tversky, 1979 (B)

Hopkins, 1996 (P5; R3)Hodder, Hopkins, and Wood, 2008 (P1; R4)Christ, Sedatole, and Towry, 2012 (P2; R5)


10 10/29 Task variables that affect JDM (accounting issues)

Readings:Bonner, 2008 – Ch. 6 – pp. 188-197; Ch. 10 – pp. 381-383 (B)Fennema and Koonce, 2010 (B)

Kadous, Koonce, and Towry, 2005 (P1; R5)Koonce, Lipe, and McAnally, 2005 (P4; R1)Bonner, Clor-Proell, and Koonce, 2014 (P3; R2)


11 11/5 Environmental variables that affect JDM (overview, reviews, accountability, groups, monetary incentives, multitasking)

Readings:Bonner, 2008 – Ch. 7 (B)

Trotman, 1985 (P5; R1)Sprinkle, 2000 (P3; R2)Brazel, Agoglia, and Hatfield, 2004 (P2; R4)


Class No.


12 11/12 Do people understand the determinants of variations in or low levels of JDM quality?

Readings:Bonner, 2008 – Ch. 8 (B)

Barton and Mercer, 2005 (P2; R3)Bonner, Hugon, and Walther, 2007 (P4; R1)Kadous and Mercer, 2012 (P3; R5)


13 11/19 Methods for improving JDM quality; future of JDM research

Readings:Bonner, 2008 – Chs. 9, 10 (B)

Bonner, Libby, and Nelson, 1996 (P5; R2)Farrell, Krische, and Sedatole, 2011 (P4; R3)Griffith, Hammersley, Kadous, and Young, 2014 (P1; R4)


11/26 NO CLASS – THANKSGIVING BREAK

14 12/3 Effects of social factors on technical JDM (e.g., social ties, status, etc.)

Readings:Sprinkle, 2003 (B)Cialdini and Goldstein, 2004 (B)

Maas, van Rinsum, and Towry (P5; R1)Bennett and Hatfield, 2013 (P4; R3)Kadous, Leiby, and Peecher, 2013 (P2; R5)


TBD Brief proposal due

IX. COMPLETE REFERENCES FOR READINGS

Class No. Readings1 Background:

Deetz, S. “The Social Production of Knowledge and the Commerical Artifact.” In L. Cummings and P. Frost (Eds.), Publishing in the Organizational Sciences. Thousand Oaks, CA: Sage Publications, 1995, pp. 44-63.Kerlinger, F. and Lee, H. Foundations of Behavioral Research (4th ed.). Fort Worth, TX: Harcourt College Publishers, 2000.Kinney, W., Jr. “Empirical Accounting Research Design for Ph.D. Students.” The Accounting Review (1986), pp. 338-350Libby, R. Accounting and Human Information Processing: Theory and Applications. Englewood Cliffs, NJ: Prentice-Hall, 1981.Sutton, R. and Staw, B. “What Theory is Not.” Administrative Science Quarterly (1995), pp. 371- 384Whetten, D. “What Constitutes a Theoretical Contribution?” Academy of Management Review (1989), pp. 49-495Manuscript evaluation form – my version adapted from Libby and Kinney readings.

2 Background:Brewer, M. “Research Designs and Issues of Validity.” In H. Reis and C. Judd (Eds.), Handbook of Research Methods in Social and Personality Psychology. New York, NY: Cambridge University Press, 2000.Das, S., Levine, C., and Sivaramakrishnan, K., “Earnings Predictability and Bias in Analysts’ Earnings Forecasts,” The Accounting Review 73 (1998), pp. 277-294Kerlinger, F. and Lee, H. Foundations of Behavioral Research (4th ed.). Fort Worth, TX: Harcourt College Publishers, 2000.Shadish, W., Cook, T., and Campbell, D. Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, MA: Houghton Mifflin. 2002.Simon, J. and Burstein, P. Basic Research Methods in Social Science (3rd edition). New York, NY: Random House, 1985.

3 Background:Carmines, E. and Zeller, R. Reliability and Validity Assessment. Newbury Park, CA: Sage Publications, 1979.Kerlinger, F. and Lee, H. Foundations of Behavioral Research (4th ed.). Fort Worth, TX: Harcourt College Publishers, 2000.Kinney, W., Jr. “Empirical Accounting Research Design for Ph.D. Students.” The Accounting Review (1986), pp. 338-350.Shadish, W., Cook, T., and Campbell, D. Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, MA: Houghton Mifflin. 2002.Simon, J. and Burstein, P. Basic Research Methods in Social Science (3rd edition). New York, NY: Random House, 1985.

4 None


Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Bloomfield, R. “Traditional vs. Behavioral Finance,” Working paper, 2010.

To discuss:Tan, H., and Libby, R., “Tacit Managerial versus Technical Knowledge as Determinants of Audit Expertise in the Field,” Journal of Accounting Research (Spring 1997), 97-113.Hong, H., and Kubik, J. “Analyzing the Analysts: Career Concerns and Biased Earnings Forecasts,” Journal of Finance (February 2003), 313-351.Srinivasan, S., “Consequences of Financial Reporting Failure for Outside Directors: Evidence from Accounting Restatements and Audit Committee Members,” Journal of Accounting Research (May, 2005), 291-334.

6 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Kahneman, D., Thinking, Fast and Slow. New York, NY: Farrar, Straus, and Giroux. 2011.Evans, J., “Dual-Processing Accounts of Reasoning, Judgment, and Social Cognition,” Annual Review of Psychology (2008), pp. 255-278.

To discuss:Hackenbrack, K., and Nelson, M., “Auditors’ Incentives and Their Application to Financial Accounting Standards,” The Accounting Review (1996), pp. 43-60.Barber, B., and Odean, T. “All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors,” Review of Financial Studies (2008), pp. 785- 818.Farrell, A., Goh, J., and White, B.J., “The Effect of Performance-based Incentive Contracts on System 1 and System 2 Provessing in Affective Decision Contexts: fMRI and Behavioral Evidence,” The Accounting Review (2014), forthcoming.

7 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Kahneman, D., Thinking, Fast and Slow. New York, NY: Farrar, Straus, and Giroux. 2011.

To discuss:Bonner, S., and Lewis, B., “Determinants of Auditor Expertise,” Journal of Accounting Research (Supplement 1990), pp. 1-20.Erkens, D., and Bonner, S., “Have You Sharpened Your Pencil Lately? The Currency of Accounting Financial Experts’ Knowledge and Accounting Quality,” Working paper, 2014.Majors, T.M., “Communicating Measurement Uncertainty: An Experimental Study of Financial Reporting Implications for Managers and Investors,” Working paper, 2014.


Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Tversky, A., and Kahneman, D., “Judgment under Uncertainty: Heuristics and Biases,” Science (1974), pp. 1124-1131.Shah, A., and Oppenheimer, D., “Heuristics Made Easy: An Effort-Reduction Framework,” Psychological Bulletin (2008), pp. 207-222.

To discuss:Libby, R., “Availability and the Generation of Hypotheses in Analytical Review,” Journal of Accounting Research (Autumn 1985), 648-667.Bonner, S., Walther, B., and Young, S. “Sophistication-Related Differences in Investors’ Models of the Relative Accuracy of Analysts’ Forecast Revisions.” The Accounting Review (2003), 679- 706.Rennekamp, K., “Processing Fluency and Investors’ Reactions to Disclosure Readability,” Journal of Accounting Research (December 2012), 1319-1354.

9 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Kahneman, D., and Tversky, A., “Prospect Theory: An Analysis of Decision Under Risk,” Econometrica (1979), pp. 263-291.

To discuss:Hopkins, P., “The Effect of Financial Statement Classification of Hybrid Financial Instruments on Financial Analysts’ Stock Price Judgments,” Journal of Accounting Research (Supplement 1996), pp. 33 – 50.Hodder, L., Hopkins, P., and Wood, D. “The Effects of Financial Statement and Informational Complexity on Analysts’ Cash Flow Forecasts,” The Accounting Review (July 2008), 915-956.Christ, M., Sedatole, K., and Towry, K., “Sticks and Carrots: The Effect of Contract Frames and Effort in Incomplete Contracts,” The Accounting Review (2012), forthcoming.

10 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Fennema, M., and Koonce, L., “Mental Accounting in Financial Reporting and Voluntary Disclosure,” Journal of Accounting Literature (2010), pp. 1-29.

To discuss:Kadous, K., Koonce, L., and Towry, K. “Quantification and Persuasion in Managerial Judgment,” Contemporary Accounting Research (Fall 2005), pp. 643-686.Koonce, K., Lipe, M.G., and McAnally, M.L., “Judging the Risk of Financial Instruments: Problems and Potential Remedies,” The Accounting Review (Jully 2005), 871-895.Bonner, S., Clor-Proell, S., and Koonce, L., and Wang, T., “Mental Accounting and Disaggregation Based on the Sign and Relative Magnitude of Income Statement Items,” The Accounting Review (November 2014), forthcoming.


Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.

To discuss:Trotman, K.,”The Review Process and the Accuracy of Auditor Judgments,” Journal of Accounting Research (Autumn 1985), 740-752.Sprinkle, G.B., “The Effect of Incentive Contracts on Learning and Performance,” The Accounting Review (July 2000), 299-326.Brazel, J., Agoglia, C., and Hatfield, R., “Electronic versus Face-to-Face Review: The Effects of Alternative Forms of Review on Auditors’ Performance,” The Accounting Review (2004), pp. 949-966.

12 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.

To discuss:Barton, J., and Mercer, M., “To Blame or Not to Blame: Analysts’ Reactions to External Explanations for Poor Financial Performance,” Journal of Accounting and Economics (2005), pp. 509-533.Bonner, S., Hugon, A., and Walther, B., “Investor Reaction to Celebrity Analysts: The Case of Earnings Forecast Revisions,” Journal of Accounting Research (June 2007), pp. 481-513.Kadous, K., and Mercer, M., “Can Reporting Norms Create a Safe Harbor? Jury Verdicts against Auditors under Precise and Imprecise Accounting Standards,” The Accounting Review (2012), pp. 565-587.

13 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.

To discuss:Bonner, S., Libby, R., and Nelson, M., “Using Decision Aids to Improve Auditors' Conditional Probability Judgments," The Accounting Review (1996), pp. 221- 240.Farrell, A., Krische, S., and Sedatole, K., “Employees’ Subjective Valuations of Their Stock Options: Evidence on the Use of Heuristics,” Contemporary Accounting Research (October 2011), 747-793.Griffith, E.E., Hammersley, J.S., Kadous, K., and Young, D., “Auditor Mindsets and Audits of Complex Estimates,” Working paper, 2014.

14 Background:Sprinkle, G., “Perspectives on Experimental Research in Management Accounting,” Accounting, Organizations and Society (2003), pp. 287-318.Cialdini, R., and Goldstein, N., “Social Influence: Compliance and Conformity,” Annual Review of Psychology (2004), pp. 591-621.

To discuss:Maas, V., van Rinsum, M., and Towry, K., “In Search of Informed Discretion: An Experimental Investigation of Fairness and Trust Reciprocity,” The Accounting Review (2012), pp. 617-644.Bennett, G.B., and Hatfield, R.C., “The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence,” The Accounting Review (January 2013), pp. 31-50Kadous, K., Leiby, J., and Peecher, M.E., “How do Auditors Weight Informal Contrary Advice? The Joint Influence of Advisor Social Bond and Advice Justifiability,” The Accounting Review (November 2013), pp. 2061-2087.

Documents

advanced auditing syllabus · Web view(please note these hours are also for my M.Acc. students); and by appt. (also, you may email me at any time) Emergencies:Call (213) 740-4321