The relationship between knowledge structure and judgments for experienced and inexperienced auditors

Article Abstract:

Given the reliance of decision makers to their long-term memory, biases in information retrieval could become a major source of decision error and the variance in such biases could explain the differences in auditor judgment performance across experience levels. A schema-based setup to explore the knowledge structure and judgment differences of both experienced and inexperienced auditors is used to study the recall of common and uncommon data by these auditors in a going-concern situation and relates this memory measure to inferences, predictions and judgments made by them. Findings show that inexperienced auditors recalled less uncommon items than the others but there were no differences recalling common items. These and other findings help determine the relationship of knowledge structure and judgment differences between the two groups.

Decision-making, Models, Decision making

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Underpricing of new issues and the choice of auditor as a signal of investment banker reputation

Article Abstract:

The effect of the investment banker's choice of auditor on the initial market for unseasoned equity issues is described. High reputation investment bankers will select high reputation auditors and their reputations will help to reduce underpricing. The test results confirm that as either reputation variable increases then the effect of other variable is reduced.

Investment banks, Accounting

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