The Effects of a Supervisor’s Active Intervention in Subordinates’ Judgments, Directional Goals, and Perceived Technical Knowledge Advantage on Audit Team Judgments

Posted: 4 May 2010 Last revised: 27 Jan 2011

See all articles by Mark E. Peecher

Mark E. Peecher

University of Illinois at Urbana-Champaign; Gies College of Business; University of Illinois College of Law

M. David Piercey

University of Massachusetts Amherst

Jay Rich

Illinois State University - College of Business

Richard M. Tubbs

University of Iowa - Department of Accounting

Date Written: April 29, 2010

Abstract

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 subordinates’ judgments? In an experiment using audit teams, supervisors with weaker or stronger goals to reach a client-preferred conclusion either were or were not asked to first actively coach a subordinate’s judgment (i.e., active intervention) before reviewing it and finalizing the audit team’s judgment. Supervisors’ intervention influenced subordinates’ inputs, which, in turn, supervisors incorporated into their final judgments. More interestingly, intervention biased supervisors’ final judgments, controlling for supervisor directional goal strength and for concurrent effects on subordinates’ inputs. However, supervisors distorted their judgments less as they perceived a larger technical knowledge advantage over subordinates. In a second experiment, auditors appear aware of the bias-reducing knowledge advantage effects but unaware of the bias-increasing active intervention effects. We discuss implications for audit team judgments and audit quality control.

Keywords: Audit team judgments, client pressure, directional goals, active intervention, technical knowledge

JEL Classification: C9, C92, M4, M41, M42, M48, M49

Suggested Citation

Peecher, Mark E. and Piercey, M. David and Rich, Jay S. and Tubbs, Richard M., The Effects of a Supervisor’s Active Intervention in Subordinates’ Judgments, Directional Goals, and Perceived Technical Knowledge Advantage on Audit Team Judgments (April 29, 2010). Accounting Review, Volume 85, No. 5, pp. 1763-1787, September 2010, Available at SSRN: https://ssrn.com/abstract=1597853

Mark E. Peecher

University of Illinois at Urbana-Champaign ( email )

Gies College of Business
1206 South Sixth Street
Champaign, IL 61820
United States
217-333-4542 (Phone)
217-244-0902 (Fax)

Gies College of Business ( email )

1206 South 6th Street
IL 61820

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

M. David Piercey (Contact Author)

University of Massachusetts Amherst ( email )

Isenberg School of Management
121 Presidents Drive
Amherst, MA 01003
United States

Jay S. Rich

Illinois State University - College of Business ( email )

Normal, IL 61761
United States

Richard M. Tubbs

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
(319) 335-0848 (Phone)
(319) 335-1956 (Fax)

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