ABSTRACT: Some cognitive abilities may act as partial substitutes for experience. These abilities have the potential to enhance the performance of inexperienced professionals by helping them synthesize and make better use of limited domain or task‐specific experience. This study investigates the substitution effect of inductive reasoning ability. An experiment required 130 practicing business valuation professionals (91 are CPAs) to solve an ill‐structured business valuation case. The results of the experiment show that the worst performance came from inexperienced professionals who had low inductive reasoning ability. However, the performance of inexperienced professionals with high inductive reasoning ability was similar to the performance of more experienced professionals. This suggests that high inductive reasoning ability acted as a partial substitute for experience. The practical importance of this substitution effect is that training in inductive reasoning has the potential to increase the performance of inexperienced accounting professionals who encounter ill‐structured problems or tasks. Accounting students would also benefit from training in inductive reasoning. Suggested future research is discussed.
