Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    The Impact of Estimate Source and Social Pressure on...
    research summary posted February 16, 2017 by Jennifer M Mueller-Phillips, tagged 09.0 Auditor Judgment, 09.03 Adequacy of Evidence 
    The Impact of Estimate Source and Social Pressure on Auditors’ Fair Value Estimate Choices
    Practical Implications:

    To the auditors’ knowledge this study is the first to examine the joint effect of social pressure and estimate source. By examining the joint effect of these two factors, they identify the boundary conditions under which the effect of estimate source holds. The results of this study indicate that auditors perceive advice to be more acceptable when it is from a superior than when it is from a peer. Further, when advice is received from a peer, auditors in this study indicate that the advice is more likely to be weighed against other evidence than when the same advice is received from a supervisor. 


    Brink, A. G., F. Tang, and L. Yang. 2016. The Impact of Estimate Source and Social Pressure on Auditors’ Fair Value Estimate Choices. Behavioral Research in Accounting 28 (2): 29 – 40. 

    social pressure, fair value estimates, experiment, auditor judgment.
    Purpose of the Study:

    This paper empirically examines how estimate source interacts with social influence pressure to affect auditors’ judgments of fair value estimates.  This research is motivated by growth in the use of fair value accounting practices in recent years and concern over the usefulness of reported fair values. Because of the subjectivity and judgment that is inherent in fair value estimation, evaluating fair value estimates poses a significant challenge to auditors and it is important to understand factors influencing auditors’ judgment in the selection and reporting of fair value estimates. While fair value accounting practices are of international concern, particular emphasis has been placed on whether emerging economies, such as China, are effectively implementing the fair value components of accounting standards. 

    Design/Method/ Approach:

    The authors conduct an experiment with Chinese auditor participants to investigate how auditors’ choices regarding the investigation of a subjective fair value estimate are influenced by the source of a fair value estimate and social pressure. 

    • The authors find that social influence pressure moderate the effect of estimate source.
      • Specifically, Chinese auditors’ risk assessments and judgments regarding whether the auditor will investigate further are not significantly influenced by information about the fair value estimate’s source when a supervisor advises the use of the questionable estimate.
      • However, when a peer gives the auditor the same advice, the source of the estimate has a significant impact on auditor judgments. 
    Auditor Judgment
    Adequacy of Evidence