.... We also find motivational optimism influences firms’ financial reporting and is associated with an increased incidence of financial misreporting. Our results are consistent with the psychology theory of motivated reasoning, which emphasizes the distortive effects of preferences on beliefs...

... the expected ordinal interaction for H1. As discussed in our experimental design, we test this hypothesis by holding the materiality condition (a qualitative materiality factor) constant and vary the presence or absence of client pressure. Motivated reasoning is constrained by the ability to develop...

...Christopher Koch; Steven E. Salterio ABSTRACT This paper examines how auditors' judgments about accounting policies may differ when experiencing different levels of affinity for client management and facing different levels of pressure from client management. The theory of motivated reasoning...