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    Perspective Taking in Auditor-Manager Interactions: An...
    research summary posted September 21, 2015 by Jennifer M Mueller-Phillips, tagged 09.0 Auditor Judgment, 09.10 Prior Dispositions/Biases/Auditor state of mind, 11.0 Audit Quality and Quality Control, 11.05 Training and General Experience 
    Perspective Taking in Auditor-Manager Interactions: An experimental investigation of auditor behavior.
    Practical Implications:

    The results of this study are important for firms to consider in hiring and training practices as the evidence supports increased perspective taking improves auditor performance and ultimately audit quality. Audit firms may benefit from hiring auditors with prior experience in the corporate world and involvement in financial-reporting, and should continue efforts to hire more “boomerangs.” Audit firms can measure dispositional (i.e., trait) perspective taking among current employees and use this measure in determining staffing assignments. In terms of training design, audit firms can consider implementing training targeted toward role-taking. Finally, audit firms can also encourage perspective taking in other ways, for example, by including perspective taking prompts in audit programs.


    Church, B. K., M. Peytcheva, W. Yu, and O. Singtokul. 2015. Perspective taking in auditor-manager interactions: An experimental investigation of auditor behavior. Accounting, Organizations and Society 45: 40-51.

    perspective taking, role-taking experience, individual difference, experimental economics
    Purpose of the Study:

    This study investigates how taking the perspective of client management affects auditors’ assessment of managers’ reporting choices and whether successful perspective taking can lead to enhanced financial-reporting quality and audit quality. Perspective taking involves taking the point of view of another, and understanding another’s thoughts, attitudes, or concerns in a specific situation. Perspective taking has been shown to improve individual judgment and decision making, thus the authors of this study investigate whether these benefits extend to the audit setting when auditors take on the role and perspective of client management. Audit firms have been increasing recruiting of former employees (or “boomerangs”), asserting the knowledge and experience auditors gain while in industry is an asset to the auditor and the firm. This study provides evidence supporting that prior role experience is a reason why “boomerangs” are successful.

    Design/Method/ Approach:

    The participants in this experimental study were students at a public university, mostly at the undergraduate level in business or economics. The evidence for this study was collected prior to September 17, 2012. The authors conduct two multi-round experiments providing participants monetary incentives designed to mimic the auditing context. In the first experiment, participants either took on a manager role followed by an auditor role or remained in the auditor role for the entire experiment. In the second study, participants took on an auditor role for the entire experiment and perspective taking disposition was measured. The task involved estimating earnings and making decisions regarding accepting or rejecting manager reported earnings values.

    • Overall, the authors find that perspective taking is beneficial to auditor performance and audit quality. Further, role-taking (i.e., taking the role of another) stimulates perspective taking.  
    • The authors find auditors with role-taking experience as a manager more accurately estimate managers’ reported earnings, compared to auditors without the role-taking experience. Auditors with role-taking experience also make better reporting decisions, in terms of whether to accept or reject manager reported earnings.
    • The authors find dispositional perspective taking (i.e., an individual’s natural ability to spontaneously take the viewpoint of another) influences auditor performance. Auditors with high perspective-taking disposition are better able to judge managers’ reported earnings than auditors with low perspective taking disposition.
    Audit Quality & Quality Control, Auditor Judgment
    Prior Dispositions/Biases/Auditor state of mind, Sustainability ServicesTraining & General Experience