The Effect of Audit Culture on Auditor Honesty and Skepticism

44 Pages Posted: 4 Jan 2019 Last revised: 5 Apr 2019

See all articles by Ryan Sommerfeldt

Ryan Sommerfeldt

University of Illinois at Urbana-Champaign

Aaron F. Zimbelman

University of South Carolina

Mark F. Zimbelman

Brigham Young University

Date Written: April 2019

Abstract

Auditors’ honesty and skepticism are crucial to their effectiveness as enablers of trust in capital markets. Regulators have recently expressed concerns that audit culture does not sufficiently strengthen these attributes. We overcome significant obstacles to investigate the influence of audit culture on auditor honesty and skepticism. In our experiment, practicing auditors and non-auditor accountants take part in two economic tasks with economic incentives that allow us to unobtrusively measure honesty and skepticism. Drawing on prior research, we measure the influence of audit culture by manipulating the salience of participants’ occupational identity. We find evidence that audit culture increases skepticism but decreases honesty. We do not observe a similar effect for non-auditor accountants, suggesting our auditor findings are not driven by broader firm- or profession-wide influences.

Keywords: Audit culture; Ethics; Integrity; Honesty; Skepticism

JEL Classification: M4, M14, M49

Suggested Citation

Sommerfeldt, Ryan and Zimbelman, Aaron F. and Zimbelman, Mark F., The Effect of Audit Culture on Auditor Honesty and Skepticism (April 2019). Available at SSRN: https://ssrn.com/abstract=3304188 or http://dx.doi.org/10.2139/ssrn.3304188

Ryan Sommerfeldt

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Aaron F. Zimbelman (Contact Author)

University of South Carolina ( email )

Darla Moore School of Business
1014 Greene Street
Columbia, SC 29208
United States

Mark F. Zimbelman

Brigham Young University ( email )

Marriott School of Management 540 N Eldon Tanner Building
Provo, UT 84602
United States
801-422-1227 (Phone)

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