Do Fine Feathers Make a Fine Bird? The Influence of Attractiveness on Fraud-Risk Judgments by Internal Auditors

International Journal of Auditing, 22 (2018), 332–344

41 Pages Posted: 19 Jun 2017 Last revised: 23 Oct 2018

See all articles by Marc Eulerich

Marc Eulerich

University of Duisburg-Essen, Mercator School of Management

Jochen Theis

University of Southern Denmark

Junpeng Lao

University of Fribourg, Department of Psychology

Meike Ramon

University of Fribourg

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Date Written: June 17, 2017

Abstract

Independence and objectivity are the chief principles assumed to underlie internal auditors’ fraud-risk judgments. However, a substantial body of evidence regarding attractiveness stereotyping and the attractiveness halo effect suggests that physical attractiveness of potential suspects may influence internal auditors’ fraud-risk judgments according to the proverb “what is beautiful is good”. In this seminal inter-disciplinary experimental study we investigated whether internal auditors are susceptible to such appearance-related biases, or whether they correct for them due to their expertise and motivation as suggested by the process model of appearance-based stereotyping. 193 internal auditors were presented a misappropriation-of-assets scenario, in which the attractiveness of a suspect was manipulated. To determine whether professional expertise is associated with increased resilience to appearance-related biases, their fraud-risk judgments were contrasted with those acquired from 240 control subjects with no auditing experience. In line with our predictions attractiveness modulated naïve subjects’ fraud-risk judgments, whereas internal auditors did not show any indication for appearance-related biases. Our findings demonstrate that internal auditors’ experience and motivation immunize them to the well-documented phenomena of physical attractiveness stereotyping and the attractiveness halo effect – at least when fraud-risk judgments do not involve face-to-face interactions. We propose a two-step procedure to maximize objectivity of internal auditors’ fraud-risk judgments.

Keywords: Internal Audit Function, Internal Auditor, Fraud, Physical Attractiveness Stereotype

JEL Classification: M4, M42,

Suggested Citation

Eulerich, Marc and Theis, Jochen and Lao, Junpeng and Ramon, Meike, Do Fine Feathers Make a Fine Bird? The Influence of Attractiveness on Fraud-Risk Judgments by Internal Auditors (June 17, 2017). International Journal of Auditing, 22 (2018), 332–344. Available at SSRN: https://ssrn.com/abstract=2988269 or http://dx.doi.org/10.2139/ssrn.2988269

Marc Eulerich (Contact Author)

University of Duisburg-Essen, Mercator School of Management ( email )

Lotharstrasse 65
Duisburg, 47057
Germany
00492033792600 (Phone)

HOME PAGE: http://www.msm.uni-due.de/ircg

Jochen Theis

University of Southern Denmark

Universitetsparken 1
DK-6000 Kolding, 6000
Denmark

Junpeng Lao

University of Fribourg, Department of Psychology ( email )

Avenue de l'Europe 20
CH-1700 Fribourg
Switzerland

Meike Ramon

University of Fribourg ( email )

Avenue de l'Europe 20
CH-1700 Fribourg
Switzerland

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