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    Effects of Differences in National Culture on Auditors’ J...
    research summary posted November 24, 2014 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.10 Impact of Diversity - e.g., gender - on Group Decision Making, 09.0 Auditor Judgment 
    Effects of Differences in National Culture on Auditors’ Judgments and Decisions: A Literature Review of Cross-Cultural Auditing Studies from a Judgment and Decision Making Perspective
    Practical Implications:

    This study is important for audit firms because the authors imply that auditors’ cross-cultural differences do not only depend on which culture they come from, but also, on the national context of the countries in which the auditors reside (e.g., legal environment, auditing standards, tax issues) and other environmental factors (e.g., firm culture). By recognizing the effect of the social environment and adopting a dynamic constructionist approach in future auditing research, cross-cultural variation of auditors can be better understood, and audit firms will be better informed when designing intervention techniques to manage these differences affecting audit quality.

    For more information on this study, please contact Christine Nolder or Tracey J. Riley.


    Nolder, C. and T. J. Riley. 2014. Effects of Differences in National Culture on Auditors’ Judgments and Decisions: A Literature Review of Cross-Cultural Auditing Studies from a Judgment and Decision Making Perspective. Auditing: A Journal of Practice and Theory 33 (2): 141-164

    Culture; ethics; risk; conflict; probability; bicultural; overconfidence; auditor judgment; diversity
    Purpose of the Study:

    In response to the shifting cultural makeup of audit staff and the importance of understanding its ultimate effect on audit quality, this paper summarizes the cross culture audit research and compares it with the broader cross-cultural judgment and decision making studies in psychology. To date, the cultural differences among auditors have not been fully understood, partially because researchers often rely on a somewhat outdated geographic trait approach. This approach assumes that each individual auditor internalizes only one culture, and this culture has a predictable impact on auditors’ judgments and decisions. The authors argue for a dynamic constructivist approach that recognizes that cross-cultural differences in judgments are heavily dependent on environmental factors that elicit different motivational and cognitive responses depending on culture.

    The authors also develop a framework that categorizes those auditor judgments and decisions most likely affected by cross-cultural differences.  The categories include:

    • Auditors’ confidence
    • Risk and probability judgments
    • Risk decisions
    • Conflict decisions
    • Ethical judgments
    Design/Method/ Approach:

    The authors discuss all relevant cross-cultural auditing studies from 1994 to 2014 in both auditing and accounting journals that examine the five categories mentioned above and relate them to key studies in judgment and decision making research in psychology. 

    • While psychologists have found that Asians (with the exceptions of the Japanese) are more overconfident than Americans or Europeans, no auditing researchers have examined cross-cultural differences in auditors’ overconfidence.
    • Psychologists, as well as most auditing researchers, have found evidence that supports the relationship between culture and risk and probability judgments.
    • Auditing researchers have found that auditors’ risk decisions might vary significantly depending on cross-cultural differences, but they all rely on individual traits instead of environmental factors in the analyses as compared with psychologists.
    • Auditing research that examines conflict decisions indicates that individuals from eastern cultures are more likely to acquiesce to clients and superiors than those from western cultures. This finding is consistent with psychological research.
    • While psychologists pay little attention to cross-cultural differences in ethical judgments, three auditing researchers have found some national differences and have emphasized the likely effect of task and environmental factors.
    • Overall, the majority of auditing studies employ the trait approach, and thus fail to consider expatriates or bicultural auditors’ judgments and decisions.
    Audit Team Composition, Auditor Judgment
    Impact of Diversity (e.g. gender) on Group Decision Making