SYNOPSIS

Previous research finds that individuals place more weight on information when they choose to obtain it than when they acquire the same information without explicit choice. We examine whether litigation risk and auditor experience influence auditors' susceptibility to the information choice effect, which has potential implications for audit effectiveness and efficiency. In our experiment, auditors evaluate the likelihood of an inventory obsolescence issue for a hypothetical client. We find that in a high litigation risk setting, less experienced auditors exhibit a choice effect. Surprisingly, in a low litigation risk setting, less experienced auditors appear to exhibit the reverse of a choice effect, weighting information they pursued less heavily than auditors who obtained the information without choice. We do not observe these effects of choice in the judgments of more experienced auditors. 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.

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