The combined effect of perspective-taking and incentives on professional skepticism

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shuk Ying Ho ◽  
Soon-Yeow Phang ◽  
Robyn Moroney
Keyword(s):  
Perspective Taking ◽  
Design Methodology ◽  
Fair Value ◽  
Combined Effect ◽  
Content Type ◽  
Professional Skepticism ◽  
Big 4 ◽  
Management Perspective

Purpose This paper aims to investigate the combined effect of two interventions, perspective taking and incentives, on auditors’ professional skepticism (hereafter skepticism) when auditing complex estimates. Specifically, this paper examines the different ways that perspective taking (management versus inspector) and incentives (absent versus reward versus penalty) combine to impact skepticism. Design/methodology/approach This paper uses an experiment with 177 experienced Big 4 auditors. The experiment used a 2 (management vs inspector perspective) × 3 (absent vs reward vs penalty incentives) between-subjects design. Findings In the absence of incentives, adopting a management perspective raises situational skepticism when measuring skepticism as appropriateness of management’s fair value estimate while adopting an inspector perspective raises situational skepticism when measuring skepticism as need for more evidence. The authors find some evidence that incentives complement perspective-taking by enhancing those aspects of skepticism for which perspective-taking performs poorly. When assessing management assumptions, auditors adopting an inspector perspective enhance their skepticism more substantially than those adopting a management perspective, and this enhancement is greater with rewards than with penalties. However, this study does not detect an interaction between incentive type and perspective-taking on auditor skepticism in relation to gathering additional evidence. Originality/value This paper extends the literature by shifting the focus from a single perspective to a comparison of two perspective-taking approaches and discusses how each of these approaches enhances different aspects of skepticism. This paper also illustrates the importance of the interplay between perspective-taking and incentives in enhancing auditor skepticism.

SFC reminding sponsors of the need to adopt an attitude of “professional scepticism”

2017 ◽  
Vol 18 (3) ◽  
pp. 82-84
Author(s):  
Gareth Hughes ◽  
James Comber
Keyword(s):  
Hong Kong ◽  
Design Methodology ◽  
Regulatory Regime ◽  
Group Company ◽  
Content Type ◽  
Professional Skepticism ◽  
Company Limited ◽  
A Company ◽  
Practical Implications ◽  
Do So

Purpose To remind sponsors to adopt an attitude of “professional skepticism” in Hong Kong IPOs. Design/methodology/approach Explains the Securities and Futures Commission (“SFC”)'s sanction on BOCOM International (Asia) Limited (“BIAL”) as a sign of determination to hold sponsors to account as gatekeepers to the Hong Kong capital markets. Findings The SFC has reprimanded and fined BIAL HK$15 million for failing to discharge its duties as a sole sponsor in a listing application for China Huinong Capital Group Company Limited (“China Huinong”), a company established in the PRC. This substantial fine reinforces the need for sponsors to ensure that they fully and properly discharge all of their duties, and that they will be held responsible for any failure to do so, even if the listing is not ultimately approved. Practical implications If sponsors fail to fulfil the requirements required under the sponsors’ regulatory regime, the SFC will be proactive and impose tough sanctions, even if the listing application is eventually withdrawn or returned by the SEHK. Originality/value Practical guidance from experienced regulatory, financial and commercial dispute resolution lawyers.

The moderating effect of culture on the relationship between accountability and professional scepticism

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Medhat Endrawes ◽  
Shane Leong ◽  
Kenan M. Matawie
Keyword(s):  
Cultural Values ◽  
Design Methodology ◽  
Middle Eastern ◽  
Cognitive Effort ◽  
Planning Stage ◽  
Content Type ◽  
Big 4 ◽  
Prior Literature ◽  
The Impact ◽  
The Relationship

Purpose This study aims to examine whether accountability and culture have an impact on auditors’ professional scepticism. It also examines whether culture moderates the effect of accountability on auditors’ professional scepticism. Design/methodology/approach Three of the Big 4 firms in Australia and Egypt participated in an audit judgement experiment, which required them to indicate their beliefs about the risk of fraud and error at the planning stage of a hypothetical audit and evaluate the truthfulness of explanations provided by the client management. The authors examined whether their professional scepticism was influenced by accountability. Findings The results indicate professional scepticism differs significantly between cultures in some situations. The fact that culture influences scepticism suggests that even when auditors use the same standards (such as ISA 240 and ISA 600), they are likely to be applied inconsistently, even within the same firm. The authors, therefore, recommend that international bodies issue additional guidance on cultural values and consider these cultural differences when designing or adopting auditing standards. Originality/value To the best of the authors’ knowledge, this is the first study that examines whether culture moderates the impact of accountability on auditors’ professional scepticism using Egyptian and Australian (Middle Eastern and Western) auditors. Prior literature suggests that individuals subject to accountability pressure increase their cognitive effort and vigilance to detect fraud and error. As the authors find evidence that culture moderates accountability pressure and as accountability affects scepticism, they add to the literature suggesting that culture can influence professional scepticism.

The risk associated with strategic decisions: is it a marketing issue?

2019 ◽  
Vol 35 (1) ◽  
pp. 6-8
Author(s):  
Davide Settembre-Blundo ◽  
Alfonso Pedro Fernández del Hoyo ◽  
Fernando Enrique García-Muiña
Keyword(s):  
Design Methodology ◽  
Management Practice ◽  
Current Debate ◽  
Strategic Decisions ◽  
New Approach ◽  
Content Type ◽  
Marketing Function ◽  
Strategic Approach ◽  
Management Perspective

Purpose The purpose of this paper is to analyze the strategic management of risks in companies from a marketing management perspective and to provide some guidance for management practice. Design/methodology/approach This paper presents the authors’ viewpoint, and it conceptualizes a new approach to risk management. Findings The conceptual discussion has opened up a possible new way for enterprises, especially SMEs, to start taking a strategic approach to risk. Originality/value This paper would like to contribute to the current debate on the role of marketing function in managerial practice beyond the classic four Ps.

A critical analysis of water PPP failures in sub-Saharan Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Salman Tariq ◽  
Xueqing Zhang
Keyword(s):  
Construction Management ◽  
Design Methodology ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Content Type ◽  
Rigorous Approach ◽  
First Case ◽  
Management Perspective ◽  
Sub Saharan

PurposeTop-down pressure from donors, public sector inefficiencies and fund deficits have steered the introduction of public–private partnerships (PPPs) in sub-Saharan Africa. However, PPP activities in the water sector have been quite insignificant compared to other infrastructure sectors in this region. In addition, a number of water PPPs have encountered great difficulties and subsequent failures. This study aims at unveiling the underlying reasons behind failures.Design/methodology/approachThis study has classified the failure types of water PPPs and reviewed the development of water PPPs in sub-Saharan Africa to identify failed ones. Eight failed case studies are completed through the rigorous approach of event sequence mapping.FindingsNine root causes of water PPP failure are identified through a thorough examination of these failed water PPP cases and the interrelationships between these failure causes are established. The failure causes are further generalized through literature focusing on water PPP failures in developing countries and problematic issues that hinder the implementation of successful water PPPs across different Sub-Saharan African countries. Recommendations are provided for future improvements in carrying out water PPPs in Sub-Saharan Africa by learning past lessons and drawing experiences.Originality/valueThis is the first case study on water PPP failures in Sub-Saharan Africa from a construction management perspective. This study will help governments and the private sector in developing stronger future water PPPs.

Effect of interactivity and congruence on brand advocacy and brand acceptance

2019 ◽  
Vol 9 (2) ◽  
pp. 152-161 ◽  
Author(s):  
Devika Vashisht
Keyword(s):  
Design Methodology ◽  
Incongruent Condition ◽  
Combined Effect ◽  
Congruent Condition ◽  
Content Type ◽  
Interactive Game ◽  
Brand Advocacy ◽  
Brand Placements ◽  
Specific Factors ◽  
The Right

Purpose The purpose of this paper is to examine the combined effect of game-interactivity and game-product congruence on consumers’ brand advocacy and brand acceptance in the context of in-game advertising. Design/methodology/approach A 2 (interactivity: high or low)×2 (game-product congruence: high or low) between-subject measures design is used. In total, 140 students participated in the study. A 2×2 between-subjects multivariate analysis of variance is used to test the hypotheses. Findings The results reveal that for a high-interactive game, congruent condition results in higher brand advocacy and superior brand acceptance than the incongruent condition. However, for a low-interactive game, both congruent and incongruent conditions will result in the same level of brand advocacy as well as equal levels of brand acceptance. Research limitations/implications This paper provides implications for theory as well as practice by providing the empirical evidence of the combined effect of game-interactivity and game-product congruence on consumers’ brand advocacy and brand acceptance from the perspective of attention and elaboration. If higher brand advocacy and greater brand acceptance are the objectives of the brand managers, then a high interactive with congruent brand placements would be the right approach for effective advergames. Originality/value This investigation contributes to non-traditional advertising media literature, specifically to the area of branded entertainment, like brand placements in digital games by examining and exploring the influence of game-specific factors on players’ brand advocacy and brand acceptance. Moreover, this paper is one of the first to reveal the real-time roles of game-specific factors in generating gamers’ brand advocacy and brand acceptance from the perspectives of attention and elaboration, in an emerging marketing context, like India.

scholarly journals The Giza pyramid: learning from this megaproject

2019 ◽  
Vol 25 (3) ◽  
pp. 364-383 ◽  
Author(s):  
Chris Procter ◽  
Mark Kozak-Holland
Keyword(s):  
Project Management ◽  
Design Methodology ◽  
Ancient Egypt ◽  
Ancient History ◽  
Recent Discussion ◽  
Content Type ◽  
Management Perspective ◽  
Great Pyramid ◽  
Many Sources ◽  
Learning From History

Purpose The purpose of this paper is to demonstrate the contemporary relevance of the management of the Great Pyramid of Giza project. Design/methodology/approach The paper uses evidence from the literature from many disciplines concerning both the objectives and construction of the pyramid. It relates this to recent discussion concerned with the issues faced in megaproject management, which are core to the discussion of success and failure. Findings The analysis shows the significance of the “break-fix model” of megaproject management and how having a sequence of megaprojects builds management through a learning process. It demonstrates the significance of innovation arising from the experience of previous projects in solving major technical challenges and illustrates the importance of the organisation and ethical management of a substantial workforce. Research limitations/implications There is very limited reliable documentary evidence from the time of the construction of Giza (c.2560 BCE). Many sources concerning ancient Egypt are still widely contested. However, the use of research from a combination of disciplines demonstrates the relevance of the project and the importance of learning from history to contemporary project management. Originality/value The authors believe that this is the first paper to analyse the Giza pyramid project from a project management perspective. This was arguably the most significant construction project of ancient history and the paper explains the lessons, which can be learned, which are very significant to today’s megaprojects.

Non-profits and the environment in China: struggling to expand their franchise

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yi Xie ◽  
Yan Meng ◽  
Jie Xiong ◽  
Lu Xu ◽  
Jie Yan
Keyword(s):  
Design Methodology ◽  
Mainland China ◽  
Diversification Strategy ◽  
Content Type ◽  
Environmental Ngos ◽  
The Past ◽  
Governmental Organizations ◽  
Non Governmental Organizations ◽  
Management Perspective ◽  
Environmental Ngo

Purpose Environmental non-governmental organizations (ENGOs), one of the major forces in environmental protection, have developed rapidly in the past few years, especially in developing countries such as China. This paper aims to reveal how the ENGOs select their focuses, specifically if they only concentrate on one focus or on contexts in which they obtain various focuses and the motivations behind their choosing strategies. Design/methodology/approach The current research interviewed 103 leaders of ENGOs covering every province in mainland China and adopts existing theories of NGOs alongside diversification strategy from a management perspective. Findings The results showed that most Chinese ENGOs now tend to be diversified but face different challenges. This research highlights the importance of ENGOs’ resources and capacities in facing current challenges and suggests directions to improve their diversification strategy. Originality/value This research adds value to the research of environmental NGOs and gives suggestions to environmental NGO practitioners, in particular to those in emerging markets.

Fair value accounting, earnings management, and the case of bargain purchase gain

2019 ◽  
Vol 28 (2) ◽  
pp. 229-253
Author(s):  
Steven Lilien ◽  
Bharat Sarath ◽  
Yan Yan
Keyword(s):  
Design Methodology ◽  
Fair Value ◽  
Control Group ◽  
Fair Value Accounting ◽  
Market Returns ◽  
Accounting Earnings ◽  
Content Type ◽  
Level 3 ◽  
Accounting Earnings Management

Purpose The purpose of this paper is to investigate the association between bargain purchase gains (BPGs) booked by the acquirer and smoothing of acquirers’ earning performance across time. Design/methodology/approach The authors use a sample of 122 bargain purchase acquisitions in non-financial industries from 2009 to 2012 and a pair-match control group of 122 goodwill acquisitions. Findings The authors find that BPGs, and in particular, the Level-3 fair value estimates of intangible assets acquired, have consistently been used to smooth earnings but that such smoothing activities are not associated with long-term market returns. Originality/value This study is the first one to investigate bargain purchase acquisitions in a broad range of non-financial industries and suggests that managers are using the valuation of intangibles to avoid unfavorable earnings even though these valuations are not credible to investors.

The effect of financial crisis on auditor conservatism: US evidence

2015 ◽  
Vol 28 (2) ◽  
pp. 160-171 ◽  
Author(s):  
Joseph Beams ◽  
Yun-Chia Yan
Keyword(s):  
Financial Crisis ◽  
Design Methodology ◽  
Environmental Changes ◽  
Accounting Firms ◽  
Content Type ◽  
Going Concern ◽  
Big 4 ◽  
Distressed Firms ◽  
Recent Financial Crisis ◽  
Auditor Conservatism

Purpose – This paper aims to examine the effect that the recent financial crisis had on auditor conservatism in the form of increased going-concern opinions. Design/methodology/approach – This study uses a sample of US’ distressed firms from 2005 to 2011 to test the change in going-concern opinions issued. This paper uses a logistic regression model to control for other predictors of going-concern opinions to determine when the financial crisis led to an increase in auditor conservatism. Findings – The authors find that auditors became more conservative in the form of issuing higher levels of going-concern opinions even after controlling for other predictors of going-concern opinions. This increased conservatism was present in both Big 4 and non-Big 4 accounting firms. The increased conservatism quickly returned to normal levels when the financial crisis eased. Originality/value – These findings add to the literature on the effects of environmental changes on audit opinions. Additionally, this study finds a difference in the timing of the reaction by large and small accounting firms, but, overall, it finds consistency in that both increased conservatism during the crisis and quickly returned to normal afterward.

Facilitating the application of auditors’ underlying skeptical disposition

2020 ◽  
Vol 33 (1) ◽  
pp. 34-56
Author(s):  
Jahanzeb Khan ◽  
Noel Harding
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Future Research ◽  
Relative Importance ◽  
Content Type ◽  
Professional Skepticism ◽  
Schwartz Value Survey ◽  
Auditor Judgments ◽  
The Relationship ◽  
Practical Implications

Purpose Motivated by ongoing calls for auditors to exercise an elevated level of professional skepticism, this paper aims to examine the relationship between basic human values (values) and an underlying skeptical disposition (trait skepticism). Understanding the values that are associated with levels of trait skepticism will help in the design of audit environments that make the application of an underlying skeptical disposition more likely. Design/methodology/approach A survey was administered in which 140 postgraduate auditing students responded to the Schwartz value survey to measure the relative importance of different values, and the Hurtt trait skepticism scale to measure trait skepticism. The relative importance of the ten values was regressed against trait skepticism. Findings This study finds that the importance placed in the values of tradition and power, relative to other values, is negatively associated with levels of trait skepticism. Research limitations/implications The use of postgraduate auditing students as participants may limit the generalizability of the study’s findings. Practical implications Qualified by the need for future research to test the generalizability of the findings to an audit practitioner sample, the results of this study suggest that auditors with higher levels of trait skepticism may experience negative affect in environments that emphasize values of power and tradition. To the extent that current audit environments emphasize tradition and power, the results may help explain why trait skepticism is not consistently reflected in audit judgments and actions. Originality/value The affective implications of the environment within which auditors exercise professional skepticism is emerging as an important area by which to understand and improve audit quality. By identifying the values that those with a high skeptical disposition place relatively less importance in, this study informs an understanding of the circumstances where an underlying skeptical disposition is more or less likely to be reflected in auditor judgments and actions.

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