The Outcome Effect and Professional Skepticism: A Replication and a Failed Attempt at Mitigation

Behavioral Research in Accounting, Volume 31 (2): 135-143, Fall 2019

Posted: 19 Dec 2019

See all articles by Joseph F. Brazel

Joseph F. Brazel

North Carolina State University - Poole College of Management - Department of Accounting

Christine Gimbar

DePaul University

Eldar Maksymov

Arizona State University (ASU) - School of Accountancy

Tammie Rech Schaefer

University of Missouri at Kansas City

Date Written: December 2, 2019

Abstract

In this research note, we replicate Brazel, Jackson, Schaefer, and Stewart’s (2016) study of how auditors evaluate skeptical behavior. Like the original study, we find that evaluators reward audit staff who exercise appropriate levels of skepticism and identify a misstatement (positive outcome). However, when no misstatement is identified (negative outcome), evaluators penalize staff who exercise appropriate levels of skepticism. One factor causing this outcome effect may be that exercising skepticism typically causes budget overages due to additional testing. Hence, we examine whether formally attributing the budget overage to skeptical judgments and actions in the audit budget file reduces outcome effects. However, while replicating the initial effect across three separate studies, we have been unable to reduce this effect. Thus, it is clear that the outcome effect in this context is very robust.

Keywords: audit, budget, evaluation, outcome effect, professional skepticism, replication

JEL Classification: M40, M41, M42

Suggested Citation

Brazel, Joseph F. and Gimbar, Christine and Maksymov, Eldar M. and Schaefer, Tammie Rech, The Outcome Effect and Professional Skepticism: A Replication and a Failed Attempt at Mitigation (December 2, 2019). Behavioral Research in Accounting, Volume 31 (2): 135-143, Fall 2019, Available at SSRN: https://ssrn.com/abstract=3497020

Joseph F. Brazel (Contact Author)

North Carolina State University - Poole College of Management - Department of Accounting ( email )

Campus Box 8113
Nelson Hall
Raleigh, NC 27695
United States
919-513-1772 (Phone)

Christine Gimbar

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

Eldar M. Maksymov

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Tammie Rech Schaefer

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
214
PlumX Metrics