ABSTRACT: We investigate the effects of audit committee members’ dispositional trust and management incentives on audit committee judgments. Results of an experiment indicate that: (1) When management has incentives to manage earnings, less trusting audit committee members are more likely to support the external auditor than are more trusting audit committee members; (2) when management has incentives to manage earnings, less trusting audit committee members are more likely to perceive that management is not credible, and more likely to perceive that management is being deceptive than are more trusting audit committee members; and (3) the interactive effects of trust and incentives on decisions to support the auditor are mediated by perceptions of management’s intent to deceive. That is, less trusting audit committee members perceive that management’s incentives to manage earnings result in potential deception by management, and less trusting audit committee members increase their support for the auditor because of concerns about management deception.
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Fall 2010
Research Article|
January 01 2010
The Effects of Trust and Management Incentives on Audit Committee Judgments
Mark Dibben
Mark Dibben
Monash University
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Online ISSN: 1558-8009
Print ISSN: 1050-4753
American Accounting Association
2010
Behavioral Research in Accounting (2010) 22 (2): 87–103.
Citation
Anna M. Rose, Jacob M. Rose, Mark Dibben; The Effects of Trust and Management Incentives on Audit Committee Judgments. Behavioral Research in Accounting 1 January 2010; 22 (2): 87–103. https://doi.org/10.2308/bria.2010.22.2.87
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