Evaluating the Strength of Evidence: How Experience Affects the Use of Analogical Reasoning and Configural Information Processing in Tax
The Accounting Review, Forthcoming
43 Pages Posted: 29 Jul 2011
Date Written: May 26, 2011
Evidence evaluation in accounting often involves both the assessment of evidence relevance and the combination of its relevance and source to assess overall strength. We decompose this strength-assessment judgment into its components – relevance assessment and source and relevance combination – and consider the effects of experience. Participants in our experiment assess the strength and relevance of tax authorities in relation to a client scenario. Contrary to prior research, we find that more-experienced participants exhibit greater use of analogical reasoning when evaluating tax-authority relevance than do less-experienced participants. We find a similar experience effect in the use of configural information processing to combine authority source and relevance, a judgment not previously considered in tax. The effects of experience are particularly important in the current environment as the tax function is a leading cause of material weaknesses and restatements under Sarbanes-Oxley and tax executives cite increasing difficulty in hiring and retaining qualified professionals.
Keywords: tax decision making, experience, authority strength assessment, relevance assessment, analogical reasoning, configural information processing
JEL Classification: M4, M40, M41
Suggested Citation: Suggested Citation