Accounting stakeholders have expressed concern that client preferences unduly influence accountants' judgment. This study involving practicing forensic accountants and auditors examines the effects of client outcome preferences and experience levels on a complex loss valuation accounting judgment, compared to the relatively easy loss valuation judgment task used in Ponemon (2005). Based on studies in motivated reasoning and accounting experience, we predict and find that experienced accountants have the capacity to ignore client-preferred outcomes when evaluating evidence for judgments. Specifically, when acting as an expert witness in a lawsuit involving a loss valuation dispute, forensic accountants and auditors both provide higher estimates of the plaintiff's damages when assuming the role of an expert retained by the plaintiff versus the court, unless participants possessed high experience. In addition, we find no difference in loss valuation judgments for practicing forensic accountants and auditors when both have high experience.
The Effects of Experience and Client-Preferred Outcomes on Accountants' Complex Loss Valuation Judgments
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Brian Ballou, Dan L. Heitger, Lester E Heitger, Jonathan S. Pyzoha, Andrew Reffett; The Effects of Experience and Client-Preferred Outcomes on Accountants' Complex Loss Valuation Judgments. Journal of Forensic Accounting Research doi: https://doi.org/10.2308/jfar-17-008
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