Auditing Judgment and Dispositional Need for Closure: Effects on Hypothesis Generation and Confidence

62 Pages Posted: 14 Jan 2008 Last revised: 10 Dec 2012

See all articles by Charles D. Bailey

Charles D. Bailey

James Madison University

Cynthia M. Daily

University of Arkansas

Thomas J. Phillips

Louisiana Tech University

Date Written: December 20, 2007


The extent to which auditors seek and process information before forming a judgment can have important consequences. In this regard, psychology researchers have identified a personality characteristic, called Cognitive Need for Closure (Kruglanski 1989a; Webster and Kruglanski 1994), concerning one's drive to terminate deliberations and reach conclusions. This construct, and Kruglanski's Need for Closure Scale (NFCS) that measures dispositional need for closure (DNFC), are well established in the psychology literature but not in the accounting or business literature. Further, similarities exist between the characteristics of persons low in DNFC and the characteristics of experts. We began our study of this construct by administering the NFCS to a sample of Big-Four auditors, finding that CPAs at higher ranks tend to be lower in DNFC. After finding significant differences across ranks, we conducted an experiment in which professional auditors offered hypotheses regarding the cause of shifts in financial ratios between two reported years. Participants continued to generate hypotheses until satisfied that they had considered the cause of the shifts. Results indicate that auditors lower in DNFC generate more hypotheses, and higher quality hypotheses, than auditors higher in DNFC. Further, although their hypotheses are lower in both number and quality, auditors higher in DNFC express greater confidence that they have included the true cause among their hypotheses. Finally, questions arise concerning the selection/socialization of auditing professionals, because persons most attracted to the profession may be less suited to it and less comfortable with the decision-making environment than they expected.

Keywords: auditing judgment, need for closure, motivated cognition, judgment and decision making

JEL Classification: M49

Suggested Citation

Bailey, Charles D. and Daily, Cynthia M. and Phillips, Thomas J., Auditing Judgment and Dispositional Need for Closure: Effects on Hypothesis Generation and Confidence (December 20, 2007). (CAAA) 2008 Annual Conference Paper. Available at SSRN: or

Charles D. Bailey (Contact Author)

James Madison University ( email )

Harrisonburg, VA 22807
United States
901 484-0867 (Phone)

Cynthia M. Daily

University of Arkansas ( email )

Fayetteville, AR 72701
United States

Thomas J. Phillips

Louisiana Tech University ( email )

P.O. Box 3178
Ruston, LA 71272
United States
(318) 257-2822 (Phone)
(318) 257-4253 (Fax)

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