Improving Jurors' Evaluations of Auditors in Negligence Cases

Kathryn Kadous

172 citations0/0 files storedContemporary Accounting Research

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Jury Decision Making Processes Auditing, Earnings Management, Governance Law, Economics, and Judicial Systems

Abstract

Abstract Prior research indicates that individuals acting as jurors experience outcome effects in audit negligence litigation. That is, jurors evaluate auditors more harshly in light of negative outcomes, even when audit quality is constant. I posit that outcome effects in this setting are caused by jurors using their negative affect (i.e., feelings) resulting from learning about negative audit outcomes as information relevant to auditor blameworthiness. I tested this hypothesis in an experiment in which I manipulated audit quality, outcome information, and provision of an attribution instruction. The attribution instruction was designed to discredit negative affect as a cue to auditor blameworthiness. Consistent with expectations, attribution participants' evaluations of auditors exhibited less reliance on outcome information and more reliance on audit quality information than did evaluations made by control participants. In fact, outcome effects were eliminated for attribution participants. Courts may be able to improve the quality of jurors' decisions in such cases by employing an attribution instruction.

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References

1983Mood, misattribution, and judgments of well-being: Informative and directive functions of affective states.1995Mood and judgment: The affect infusion model (AIM).1991Personality and susceptibility to positive and negative emotional states.1988Outcome bias in decision evaluation.1990Hindsight: Biased judgments of past events after the outcomes are known.1977On the psychology of experimental surprises.1993The story model for juror decision making 1998The persistent use of negative affect by anxious individuals to estimate risk.

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