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UNIVERSITY OF SOUTHERN CALIFORNIALeventhal School of AccountingFall 2017 (Revised as of 9/2/17)

ACCT 602 (Section 14302R) – Judgment and Decision-Making Research in Accounting

Instructor: Professor Sarah Bonner – Ernst & Young Professor; Professor of Management and Organization

Class Hours: 10:00 – 12:50 Wed (HOH 114)Office: ACC 119Office Phone: (213) 740-5025Email Address: [email protected] Hours: 1:00 – 3:00 TTh, 1:00 – 2:00 Wednesday (please note these hours are

also for my M.Acc. students); and by appt. (also, you may email me at any time)

Emergencies: Call (213) 740-4321 (for a personal emergency) or (213) 740-9233 or listen to 91.5 KUSC radio (for emergency information)

USC Information: (213) 740-2311Prerequisites: Departmental approvalCorequisites: None

I. COURSE DESCRIPTION

This is a Ph.D.-level survey course on judgment and decision-making (JDM) research in accounting. The overall objective of the course is to provide you with the tools needed for educated consumption of the JDM literature in accounting.1 In addition, because some of you are new to reading research papers, the first few weeks of the course will cover fundamental principles of research design. These principles pertain to all types of accounting research, not just JDM research, and, therefore, this information should be pertinent to other courses as well. The JDM section of the course is organized as follows. First, we consider why one would want to study JDM in accounting contexts and do so using psychology theories. Second, we will discuss variables related to the person, task, and environment that affect JDM quality. The task section will cover variables related to accounting per se. Third, we will examine whether users of accounting-related JDM understand these determinants of quality, and the impact of solutions for low-quality JDM.

1 Students interested in conducting research on JDM (or on any other “behavioral” topics) obviously need training beyond that provided by this course, specifically in psychology and methods.

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II. COURSE GOAL AND LEARNING OBJECTIVES; COURSE FORMAT

The overall goal of this course is to provide you with the tools needed for educated consumption of the JDM literature in accounting. Additionally, as mentioned above, this semester’s course will briefly cover research design issues. Subsumed under this goal are several specific learning objectives and desired outcomes of this class:

Research design objectives:

You should gain factual knowledge of important research terminology , including but not limited to: theory, causality, method, internal validity, external validity, construct validity, construct, variable, sample, measurement, and control.

-- The desired outcome for this objective is that you be able to define and describe these concepts.

You should learn fundamental principles related to doing research . These fundamental principles are among the specific skills and competencies needed by researchers. In particular, we will learn these principles by learning a conceptual framework that embodies key principles of research. These principles include those related to proper measurement of conceptual variables, proper control for alternative explanations, and the like.

-- The desired outcome for this objective is that you be able to describe these principles.

You should learn to apply the above terminology to novel situations . This learning would include the ability to recognize, based on your understanding of terminology, whether something you read is a theory, a construct, a variable, etc. You should also begin to learn to apply the above principles to novel situations -- this would include determining whether a researcher has properly developed hypotheses, properly measured variables, properly controlled for alternative explanations, etc.

-- The first desired outcome for these objectives is that you be able to classify “good” (or “present”) vs. “bad” (“absent”) examples of important research concepts, e.g., whether a hypothesis development section in a paper does or does not contain theory. An additional desired outcome is that you can begin to demonstrate the application of research principles to others’ and your own work. You obviously cannot completely learn to do this in three weeks – this is why my objective is that you can begin to do these things.

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JDM objectives:

You should gain factual knowledge of important constructs related to the psychology of judgment and decision-making, including but not limited to: judgment, decision, knowledge content/organization, abilities, cognitive processes, information search, retrieval, recall, Type 1/2 processing, motivated reasoning, overconfidence, heuristics, task complexity, framing, decision aid.

-- The desired outcome for this objective is that you be able to define and describe these constructs.

You should gain factual knowledge of important issues related to judgment and decision-making research in accounting, including but not limited to: an understanding of the importance of psychology-based JDM research in accounting, an appreciation for the issues related to measuring JDM quality, and an understanding of the advantages and disadvantages of various methods that can be used to study JDM.

-- The desired outcome for this objective is that you be able to describe and discuss these issues.

You should learn fundamental principles (i.e., research findings) of judgment and decision-making behavior in accounting settings, including, for example, the pervasive finding that JDM is influenced by irrelevant changes in task format (I do not provide a list here as the list would be too lengthy). To facilitate learning these fundamental principles, we will engage in two key activities. First, each class will begin with a lecture that presents the key findings from psychology related to the topic of the day. Second, we will read papers that present examples of these findings in accounting settings.

-- The desired outcome for this objective is that you be able to describe these key research findings.

You should begin to learn to apply the above terminology to novel situations . This learning would include the ability to recognize, based on your understanding of terminology, whether, for example, a human capability is an ability or an acquired type of knowledge.

-- The desired outcome for this objective is that you begin to be able to classify “good” (or “present”) vs. “bad” (“absent”) examples of important psychological constructs relevant to JDM, e.g., whether what an author describes in a paper truly is a type of “knowledge.” I have found this to be a very important skill in evaluating JDM papers in accounting because a surprising number of authors use psychological constructs either very loosely or, worse, incorrectly.

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You should also begin to learn to apply the above principles (research findings) to novel situations. This objective pertains to being able to determine whether researchers have properly represented prior findings in development of their hypotheses. You are only expected to have very rudimentary skills in this area as several psychology courses would be required to have high-level skills.

-- The desired outcome is that you can begin to be able to recognize obvious deficiencies in representations of previous research findings in JDM studies in accounting.

You should begin to learn how to analyze and critically evaluate JDM research in accounting. This beginning will come partially from learning and applying the conceptual framework that organizes this course, the terminology, and the key research findings. However, I also expect that you will begin to have an appreciation for the factors that specifically affect various types of validity in JDM studies, e.g., the key correlated omitted variables that arise.

-- The key desired outcome for this objective is that you begin to be able to evaluate the quality of a JDM research study in accounting by understanding the terminology, the key issues JDM studies do and should address, the key research findings, and the unique threats to validity.

To achieve the above learning objectives, I will employ a combination of background readings, interactive lectures, student presentations and discussion of research articles, and a final exam. With the exception of the first two class periods which will consist mostly of lecture and discussion of a few questions, and the fourth class period that will consist entirely of student discussion, each class period will begin with a short lecture that provides a framework for the area of research. I believe this to be of the utmost importance as a great deal of research has demonstrated the importance to learning of having a framework prior to digesting the material. Further, frameworks can be learned through instruction much more rapidly and accurately than they can be learned through experience. After the short lecture, the primary readings will be presented using the Kinney and Libby methods for analyzing and critiquing papers.

IV. REQUIRED TEXTS, READINGS, AND OTHER TOOLS; RECOMMENDED OR ADDITIONAL READINGS

The required texts for this course are:

W. Shadish, T. Cook, and D. Campbell, Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, Massachusetts: Houghton Mifflin Company, 2002 (ISBN 0395615569)

D. Kahneman. Thinking, Fast and Slow. New York, NY: Farrar, Straus and Giroux, 2011 (ISBN 0374275637)

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Other materials will consist of journal articles, book chapters, and working papers. You will be asked to download these materials from Blackboard.

For each class period, there will be background readings (denoted with a “B” in the list of reading assignments) and readings to discuss. The background readings generally are review papers or book chapters that cover the topic of interest. These background readings are considered mandatory reading, but will not be discussed per se during class. However, you will be expected to understand the critical points of these articles, which will be reinforced through lectures. In other words, this material is fair game for the final exam and qualifying exams.

The “readings to discuss” are the ones for which you will do two things, as discussed below. For these readings, I have attempted to choose recent papers in areas where research still is quite active, and more classic papers either in areas where it is not or where the classic papers are particularly important. I do not warrant that the papers I have chosen are the best in any given area. Further, many of the topic areas have been researched quite extensively, so the papers you read may only begin to scratch the surface of the area. Finally, the papers almost all are related to financial reporting or auditing topics. There is very little JDM research in tax and management accounting research tends to focus on decisions such as choice of contracts rather than technical JDM.

For each topic we cover, there are hundreds of additional readings. Thus, I have not listed additional readings for each session, as this would be overwhelming. However, you should feel free to inquire further about any topic in which you have a particular interest.

V. GRADE COMPOSITION AND GRADING EXPECTATIONS

Total points for this course are 1000. Your letter grade will be determined based on your relative performance (vis-à-vis your peers).

The 1000 points for this course are divided as follows:

Component PointsWritten assignmentCritic or advocate presentations (5 total)General class participationBoxes (10 total)Final exam

75225100250

350

Total 1000

5

Written Assignment

75 points are allocated to this assignment, which is due on September 13 and is related to the research design section of the class. I will grade this assignment based on whether you completed all parts of the assignment, the effort you put into the assignment as exhibited by your thoroughness and depth of thought, and, to a lesser extent, accuracy of application of concepts. You will be asked to share portions of your assignment with the class, so please be prepared to write your answers on the board or discuss them verbally (in other words, you do not need to prepare a formal presentation, but rather simply be prepared to discuss your written work). Please type this assignment and email to me before class. The details of the assignment are as follows.

Complete the manuscript evaluation form (including the boxes) for each of the following two articles:

Miller, B. “The Effects of Reporting Complexity on Small and Large Investor Trading,” The Accounting Review (2010), pp. 2107-2143.

Rennekamp, K., “Processing Fluency and Investors’ Reactions to Disclosure Readability,” Journal of Accounting Research (2012), pp. 1319-1354

While completing the form for the second paper, make note of key differences between your answers here and those for the first paper (in other words, think about general differences in the answers that might appear on a form for a paper that uses an experiment versus a paper that analyzes archival data). You do NOT need to write up this part to turn in – just think about it for discussion purposes.

Assignments Related to Papers to Discuss

Presentations

Starting in week 5, there are three papers to discuss each week. For each of these three papers, I have assigned someone the role of critic and someone the role of advocate. The roles of the critic and advocate (and the general procedures for discussing readings) are described below:

1. Critic – the critic will begin the discussion related to an article by taking no more than 10 minutes to provide a critical evaluation of the study. The critic should not summarize the article, because everyone will have read the paper. Any confusion about the article can be discussed in depth during the general discussion time. Keep in mind that 10 minutes goes fast, so get to the point and focus on the most important criticisms (for example, don’t point out typos). Dimensions to consider when developing a critical evaluation include strength of motivation and theory, design, manipulation and measurement, analysis, presentation, and theoretical and/or practical insights offered. The manuscript evaluation form (including the boxes) provides you with a framework that touches on all these key areas. It may

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be the case that there are more “important criticisms” than 10 minutes can hold; you will have to use your judgment to prioritize those upon which you should focus.

2. Advocate – The advocate will serve as a counterpoint person. That is, you should put yourself in the author(s)’ shoes, and defend the paper accordingly. You will have 5 minutes after the critic makes his or her comments to counterargue the specific points made by the critic. Keep in mind that the role of advocate may be more difficult than the role of the critic.

Most important, ex ante communication between the critic and advocate is not allowed. Why? When you write papers, one skill you must develop is anticipating reviewer criticisms and heading them off. The same typically goes for presenting papers and audience criticisms; that is, your audience typically does not submit questions in advance. Thus, to learn this skill, you must have legitimate (unaided) practice. By the same token, you should not refer to other students’ notes or have discussions with other students when preparing for these roles, be they USC students currently or previously enrolled in this class or students elsewhere. Again, it is very difficult to fully understand the material when relying on other people’s work.

You will have 5 critic/advocate assignments over the course of the semester, each worth 45 points. I will evaluate you primarily as to the content of your presentation. Evaluation of context will include an assessment of thoroughness, understanding of key concepts and details in the paper, clarity of thought, etc.

General Class Discussion

After the presentation of each paper by the critic and response by the advocate, the class will be open to general discussion with the critic in charge of the discussion. That is, audience members will ask questions of the critic (and perhaps the advocate). Even though the critic and advocate are fully prepared, it is up to the rest of the class to keep the conversation going after the first 15 minutes (pretend that you are the audience members at a presentation). If you consistently remain silent on papers for which you are not the advocate or critic, this will lower your participation grade. In other words, everyone is expected to fully read every paper and be prepared to discuss it, irrespective of role. Doing the boxes (see below) should help you prepare for this discussion, as well as for the critic and advocate roles.

As above, you should prepare for this discussion on your own. That is, you should not refer to other students’ notes or have discussions with other students about the papers, be they USC students currently or previously enrolled in this class or students elsewhere.

General class participation is worth 100 points in total and will be graded primarily as to quality (whether questions are on point and important, etc.) with the caveat that silence (lack of quantity) will reduce your grade, as mentioned above.

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Boxes

In addition to being prepared to speak as a critic, advocate, or general class member for each paper each day, you should prepare boxes for each of the three papers to discuss for each class starting with week 5. I will randomly select which paper’s boxes you will be asked to turn in. These boxes will be explained in the first section of the class and you will get practice with them for week 4’s class. The boxes should be filled in with sufficient detail to demonstrate a clear understanding of the paper. For example, the operational level of a variable should be described as to what type of measure it is (e.g., a self-report), what type of scale is used (e.g., a 1-7 scale), and so forth. If a paper has multiple parts, e.g., 2 experiments, you must fill out boxes for each experiment. In addition to filling in the boxes, I will expect you to describe the theory next to link 1.

Because you will turn in a copy of the boxes on the spot, you should print out 2 copies of boxes for each paper so that you will have one to retain irrespective of which paper’s boxes I choose to collect. As above, you should prepare your boxes on your own. That is, you should not refer to other students’ notes or have discussions with other students about the papers/boxes, be they USC students currently or previously enrolled in this class or students elsewhere.

Honor Code Expectations

Finally, while I expect that Ph.D. students will never violate any of our academic integrity standards, I am obligated to provide you with my policies. With regard to the final exam, sharing information with other students about the contents of or answers to the exams is considered a violation of the Honor Code, and will result in an “F” for the class. Additionally, using reference sources of any sort on the final is a violation of academic integrity and will result in an “F” for the class. With regard to oral presentations assignments, my policy is that all presentations are to be completed individually. It will be considered an Honor Code violation if any discussion about the presentation has occurred among students. If you have questions about an assignment, please direct them to me. In other words, all work in this class is to be your own!

Statement for Students with Disabilities:

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to me as early in the semester as possible. DSP is located in STU 301 and is open 8:30 A.M. – 5:00 P.M., Monday through Friday. The phone number for DSP is (213) 740-0776.

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VI. INDIVIDUAL CLASS TOPICS AND ASSIGNMENTS

Class No. Date Topics Assignments1 8/23 Introduction to scientific research and

accounting research; introduction to framework and concepts for understanding empirical accounting research

Readings:Deetz, 1995 (B)Kerlinger and Lee, 2000, Ch. 1 (B)Kinney, 1986 (B)Libby, 1981, pp. 11-15 (B)Sutton and Staw, 1995 (B)Whetten, 1989 (B)Manuscript evaluation form (B)

Assignment:None

2 8/30 Causality and validity; research designs; validity issues in key designs and methods used in accounting research

Readings:Brewer, 2000 (B)Bloomfield, Nelson, and Soltes, 2016 (B)Das, Levine, and Sivaramakrishnan, 1998 (B) – you can skim this one; to be used as an example in classKerlinger and Lee, 2000, Chs. 18-20 (B)Libby, Bloomfield, and Nelson, 2002 (B)Shadish, Cook and Campbell, 2002, Chs. 1-3 (B)Simon and Burstein, 1985, Ch. 35 (B)

Assignment:None

3 9/6 Operationalizing constructs and other elements of research (e.g., sample selection) – effects on various validities

Readings:Bamber, Christensen, and Gaver, 2000 (B)Carmines and Zeller, 1979, Chs. 1-4 (B)Kerlinger and Lee, 2000, Chs. 3, 8, 26 (B)

Shadish, Cook, and Campbell, 2002, Chs. 2, 3, 8 (review Chs. 2 and 3 if you feel you need to) (B)Simon and Burstein, Ch. 9 (B)

Assignment:None

4 9/13 Using the manuscript evaluation form

Wrap-up of research design issues

Readings:None

Written assignment: see page 6 of syllabus

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Class No. Date Topics Assignments5 9/20 Overview of human JDM Readings:

Bonner, 2008 – Chs. 1, 2, 5 – pp. 107-110, 7-200-202 (B)Kahneman, 2011 – Introduction, Chs. 1-3 (B)Kadous and Zhou, 2016 (B)

Barber and Odean, 2008 (C1; A2)Dietrich et al., 2001 (C3; A4)Farrell, Goh, and White, 2014 (C5; A6)

Written and Oral Assignment:Prepare presentations or reviews for articles

6 9/27 Person variables that affect JDM (knowledge & memory retrieval, abilities)

Readings:Bonner, 2008, Ch. 3, Ch. 4 – pp. 79-84, Ch. 5 – pp. 120-124 (B)Kahneman, 2011, Chs. 4, 7 (B)

Bonner and Lewis, 1990 (C7; A8)Bonner, Libby, and Nelson, 1996 (C9; A10)Rau and Moser, 1999 (C11; A12)


7 10/4 Person variables (other individual differences)

Readings:Bonner, 2008, Ch. 4 – pp. 89-106 (B)Capps et al., 2016 (B)

Graham, Harvey, and Puri, 2013 (C11; A3)Ham, et al., 2017 (C2; A5)Schrand and Zechman, 2012 (C4; A7)

8 10/11 Person variables that affect JDM (motivation/goal-based processing)

Readings:Bonner, 2008, Ch. 7 – 200-202 (B)Griffith, Kadous, and Young, 2016 (B)Hackenbrack and Nelson, 1996 (B)

Brown, 2014 (C6; A9)Hales, 2007 (C8; A11)Kadous, Kennedy, and Peecher, 2003 (C10; A1)


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Class No.

Date/ Time Topics Assignments

9 10/18 Person variables that affect JDM (heuristics, other processing issues)

Readings:Bonner, 2008 – Ch. 5, pp. 110-120, 124-156 (B)Shah and Oppenheimer, 2008 (B)Tversky and Kahneman, 1974 (B)

Bonner, Walther, and Young, 2003 (C1; A4)Elliott, et al., 2014 (C2; A5)Libby, 1985 (C3; A6)


10 10/25 Social/interpersonal variables that affect JDM

Readings:TBD (B)Anderson, et al., 2015 (B)Ashforth and Mael, 1989 (B)

Bauer, 2015 (C7; A10)Bennett and Hatfield, 2013 (C8; A11)Sun, Tan, and Zhang, 2015 (C9; A12)


11 11/1 Task variables that affect JDM (overview, complexity, features of information, framing)

Readings:Bonner, 2008 – Ch. 6 – pp. 157-188 (B)Fennema and Koonce, 2010 (B)Kahneman & Tversky, 1979 (B)

Bonner, et al., 2014 (C5; A2)Elliott, Hobson, and White, 2015 (C6; A9)Hodder, Hopkins, and Wood, 2008 (C7; A4)


12 11/8 Task variables that affect JDM (accounting issues)

ReadingsBonner, 2008 – Ch. 6 – pp. 188-197; Ch. 10 – pp. 381-383 (B)

Hopkins, 1996 (C11; A8)Kadous, Koonce, and Towry, 2005 (C??; A3)Koonce, Lipe, and McAnally, 2005 (C10; A1)


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Class No.

Date/ Time Topics Assignments

13 11/15 Do people understand the determinants of variations in or low levels of JDM quality?

Readings:Bonner, 2008 – Ch. 8 (B)

Barton and Mercer, 2005 (C2; A5)Blankespoor, Hendricks, and Miller, 2017 (C4; A3)Kadous and Mercer, 2012 (C6; A1)


14 11/22 USC CLOSED; NO CLASS

15 11/29 Methods for improving JDM quality; future of JDM research

Readings:Bonner, 2008 – Chs. 9, 10 (B)

Bonner, Majors, and Ritter, 2017 (C9; A11)Choi, et al., 2016 (C10; A9)Griffith, et al., 2015 (C8; A7)


TBD Final exam

Number Student1 Joon2 Tyler3 Tina4 Ventsi5 Vivek6 Ryan7 Suteera8 Fan9 Jung Koo10 Aner11 Fiona

IX. COMPLETE REFERENCES FOR READINGS

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Class No. Readings1 Background:

Deetz, S. “The Social Production of Knowledge and the Commerical Artifact.” In L. Cummings and P. Frost (Eds.), Publishing in the Organizational Sciences. Thousand Oaks, CA: Sage Publications, 1995, pp. 44-63.Kerlinger, F. and Lee, H. Foundations of Behavioral Research (4th ed.). Fort Worth, TX: Harcourt College Publishers, 2000.Kinney, W., Jr. “Empirical Accounting Research Design for Ph.D. Students.” The Accounting Review (1986), pp. 338-350Libby, R. Accounting and Human Information Processing: Theory and Applications. Englewood Cliffs, NJ: Prentice-Hall, 1981.Sutton, R. and Staw, B. “What Theory is Not.” Administrative Science Quarterly (1995), pp. 371- 384Whetten, D. “What Constitutes a Theoretical Contribution?” Academy of Management Review (1989), pp. 49-495Manuscript evaluation form – my version adapted from Libby and Kinney readings.

2 Background:Bloomfield, R., Nelson, M., and Soltes, E. “Gathering Data for Archival, Field, Survey, and Experimental Accounting Research,” Journal of Accounting Research (2016), pp. 341-395.Brewer, M. “Research Designs and Issues of Validity.” In H. Reis and C. Judd (Eds.), Handbook of Research Methods in Social and Personality Psychology. New York, NY: Cambridge University Press, 2000.Das, S., Levine, C., and Sivaramakrishnan, K., “Earnings Predictability and Bias in Analysts’ Earnings Forecasts,” The Accounting Review 73 (1998), pp. 277-294Kerlinger, F. and Lee, H. Foundations of Behavioral Research (4th ed.). Fort Worth, TX: Harcourt College Publishers, 2000.Libby, R., Bloomfield, R., and Nelson, M., “Experimental Research in Financial Accounting,” Accounting, Organizations and Society (2002), pp. 775-810.Shadish, W., Cook, T., and Campbell, D. Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, MA: Houghton Mifflin. 2002.Simon, J. and Burstein, P. Basic Research Methods in Social Science (3rd edition). New York, NY: Random House, 1985.

3 Background:Carmines, E. and Zeller, R. Reliability and Validity Assessment. Newbury Park, CA: Sage Publications, 1979.Kerlinger, F. and Lee, H. Foundations of Behavioral Research (4th ed.). Fort Worth, TX: Harcourt College Publishers, 2000.Kinney, W., Jr. “Empirical Accounting Research Design for Ph.D. Students.” The Accounting Review (1986), pp. 338-350.Shadish, W., Cook, T., and Campbell, D. Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, MA: Houghton Mifflin. 2002.Simon, J. and Burstein, P. Basic Research Methods in Social Science (3rd edition). New York, NY: Random House, 1985.

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Class No. Readings4 None

5 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Kadous, K. and Zhou, D. “Maximizing the Contribution of JDM-Style Experiments in Accounting,” Working paper, 2016.Kahneman, D., Thinking, Fast and Slow. New York, NY: Farrar, Straus, and Giroux. 2011.

To discuss:Barber, B., and Odean, T. “All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors,” Review of Financial Studies (2008), pp. 785- 818.Dietrich, J., Kachelmeier, S., Kleinmuntz, D., and Linsmeier, T., “Market Efficiency, Bounded Rationality, and Supplemental Business Reporting Decisions,” Journal of Accounting Research (2001), pp. 243-268.Farrell, A., Goh, J., and White, B.J., “The Effect of Performance-based Incentive Contracts on System 1 and System 2 Processing in Affective Decision Contexts: fMRI and Behavioral Evidence,” The Accounting Review (2014), 1979-2010.

6 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Kahneman, D., Thinking, Fast and Slow. New York, NY: Farrar, Straus, and Giroux. 2011.

To discuss:Bonner, S., and Lewis, B., “Determinants of Auditor Expertise,” Journal of Accounting Research (Supplement 1990), pp. 1-20.Bonner, S., Libby, R., and Nelson, M., “Using Decision Aids to Improve Auditors' Conditional Probability Judgments," The Accounting Review (1996), pp. 221- 240.Rau, S., and Moser, D., “Does Performing Other Audit Tasks Affect Going-Concern Judgments?” The Accounting Review (1999), pp. 493-508.

7 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Capps, G., Koonce, L., and Petroni, K. “Natural Optimism in Financial Reporting,” Accounting Horizons (2016), 79-91.

To discuss:Graham, J., Harvey, C., and Puri, M., “Managerial Attitudes and Corporate Actions,” Journal of Financial Economics (2013), pp. 103-121.Majors, T., “The Interaction of Communicating Measurement Uncertainty and the Dark Triad on Managers’ Reporting Decisions,” The Accounting Review (2016), pp. 973-992.Schrand, C. and Zechman, S. “Executive Overconfidence and the Slippery Slope to Financial Misreporting,” Journal of Accounting and Economics (2012); 311-329.

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Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Griffith, E., Kadous, K., and Young, D. “How Insights from the ‘New’ JDM Research Can Improve Auditor Judgment: Fundamental Research Questions and Methodological Advice,” Auditing: A Journal of Practice & Theory (2016), 1-22.Hackenbrack, K., and Nelson, M., “Auditors’ Incentives and Their Application to Financial Accounting Standards,” The Accounting Review (1996), pp. 43-60.Tversky, A., and

To discuss:Brown, T., “Advantageous Comparison and Rationalization of Earnings Management,” Journal of Accounting Research (2014), pp. 849-876.Hales, J., “Directional Preferences, Information Processing, and Investors’ Forecasts of Earnings,” Journal of Accounting Research (2007), pp. 607-628.Kadous, K., Kennedy, J., and Peecher, M. “The Effect of Quality Assessment and Directional Goal Commitment on Auditors’ Acceptance of Client-Preferred Accounting Methods,” The Accounting Review (2003), pp. 759-778.

9 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Shah, A., and Oppenheimer, D., “Heuristics Made Easy: An Effort-Reduction Framework,” Psychological Bulletin (2008), pp. 207-222.Tversky, A., and Kahneman, D., “Judgment under Uncertainty: Heuristics and Biases,” Science (1974), pp. 1124-1131.

To discuss:Bonner, S., Walther, B., and Young, S. “Sophistication-Related Differences in Investors’ Models of the Relative Accuracy of Analysts’ Forecast Revisions.” The Accounting Review (2003), 679- 706.Elliott, B., Jackson, K., Peecher, M., and White, B., “The Unintended Effect of Corporate Social Responsibility Performance on Investors’ Estimates of Fundamental Value,” The Accounting Review (2014), pp. 275-302.Libby, R., “Availability and the Generation of Hypotheses in Analytical Review,” Journal of Accounting Research (Autumn 1985), 648-667.

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Anderson, C., Hildreth, J., and Howland, L., “Is the Desire for Status a Fundamental Motive? A Review of The Empirical Literature,” Psychological Bulletin (2013), pp. 574-601.Ashforth, B. and Mael, F., “Social Identity Theory and the Organization,” The Academy of Management Review (1989), pp. 20-39.

To discuss:Bauer, T. “The Effects of Client Identity Strength and Professional Identity Salience on Auditor Judgments,” The Accounting Review (2015), 95-114.Bennett, G.B., and Hatfield, R.C., “The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence,” The Accounting Review (January 2013), pp. 31-50Sun, Y., Tan, H., and Zhang, J., “Effect of Concession-Timing Strategies in Auditor-Client Negotiations: It Matters Who Is Using Them,” Contemporary Accounting Research (2015), pp. 1489-1506.

11 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.Fennema, M., and Koonce, L., “Mental Accounting in Financial Reporting and Voluntary Disclosure,” Journal of Accounting Literature (2010), pp. 1-29.Kahneman, D., and Tversky, A., “Prospect Theory: An Analysis of Decision Under Risk,” Econometrica (1979), pp. 263-291.

To discuss:Bonner, S., Clor-Proell, S., and Koonce, L., and Wang, T., “Mental Accounting and Disaggregation Based on the Sign and Relative Magnitude of Income Statement Items,” The Accounting Review (November 2014), pp. 2087-2114.Elliott, W., Hobson, J., and White, B., “Earnings Metrics, Information Processing, and Price Efficiency in Laboratory Markets,” Journal of Accounting Research (2015), pp. 555-592.Hodder, L., Hopkins, P., and Wood, D. “The Effects of Financial Statement and Informational Complexity on Analysts’ Cash Flow Forecasts,” The Accounting Review (July 2008), pp. 915- 956.

12 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.

To discuss:Hopkins, P., “The Effect of Financial Statement Classification of Hybrid Financial Instruments on Financial Analysts’ Stock Price Judgments,” Journal of Accounting Research (Supplement 1996), pp. 33 – 50.Kadous, K., Koonce, L., and Towry, K. “Quantification and Persuasion in Managerial Judgment,” Contemporary Accounting Research (Fall 2005), pp. 643-686.Koonce, K., Lipe, M.G., and McAnally, M.L., “Judging the Risk of Financial Instruments: Problems and Potential Remedies,” The Accounting Review (Jully 2005), pp. 871-895.

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Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.

To discuss:Barton, J., and Mercer, M., “To Blame or Not to Blame: Analysts’ Reactions to External Explanations for Poor Financial Performance,” Journal of Accounting and Economics (2005), pp. 509-533.Blankespoor, E., Hendricks, B., and Miller, G., “Perceptions and Price: Evidence from CEO Presentations at IPO Roadshows,” Journal of Accounting Research (2017), 275-327.Kadous, K., and Mercer, M. “Can Reporting Norms Create a Safe Harbor? Jury Verdicts against Auditors under Precise and Imprecise Accounting Standards,” The Accounting Review (2012), 565-587.

14 Background:Bonner, S., Judgment and Decision-Making in Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc. 2008.

To discuss:Bonner, S., Majors, T., and Ritter, S., TBA.Choi, W., Hecht, G., Tafkov, I., and Towry, K. “Vicarious Learning under Implicit Contracts,” The Accounting Review (2016), 1087-1108.Griffith, E., Hammersley, J.S., Kadous, K., and Young, D., “Auditor Mindsets and Audits of Complex Estimates,” Journal of Accounting Research (2015), 49-77.

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