The Effect of Information Choice on Auditors' Judgments and Confidence
40 Pages Posted: 25 Jun 2011 Last revised: 2 Mar 2018
Date Written: August 5, 2015
Previous research finds that individuals place more weight on information when they choose to obtain it than when they acquire it without explicit choice. We examine whether litigation risk and auditor experience influence auditors’ susceptibility to this information choice effect. In our experiment, auditor participants evaluate the likelihood of an inventory obsolescence issue for a hypothetical client subsidiary. We find that in a high litigation risk setting, less-experienced auditors weight information they choose to acquire more heavily than do less-experienced auditors who acquire the same information without choice. Further, we predict and find that auditors choosing to acquire information are more confident in their judgments than auditors who acquire the same information without choice. Interestingly, the effect of choice on confidence is exacerbated by experience, and is especially pronounced when litigation risk is high. Our study contributes to the auditing, management, and psychology literatures on information choice, with practical and theoretical implications for judgment and decision-making in accounting settings.
Keywords: information pursuit, litigation risk, confidence, experience, consequentiality
JEL Classification: M40, M41, M49
Suggested Citation: Suggested Citation