TY - JOUR
T1 - Interactions of intolerance of ambiguity and of contingent liability on auditors' avoidance of litigation
AU - Majid, Abdul
AU - Pragasam, John
PY - 1997/12
Y1 - 1997/12
N2 - 90 practicing auditors were given identical sets of financial statements except for the amount of contingent liability which was varied independently over three amounts of $50,000, $500,000 and $1 million. Based on this information, they were to indicate on a 7-point rating scale anchored by 1 (little likelihood) to 7 (great likehhood), their likelihood of issuing an unqualified, i.e., clean, report. 65 useable responses were received. In accordance with the theory of tolerance for ambiguity, it was hypothesized that auditors who were rated on the MacDonald AT-20 scale as being intolerant of ambiguity would have less preference for an unqualified audit report at higher amounts of contigent liability than auditors who were rated as being tolerant of ambiguity. A between-subjects analysis of variance showed that the auditors' tolerance for ambiguity interacted with different amounts of contingent liability to affect the likelihood of their issuing an unqualified report. Implications in terms of auditors' avoidance of litigation by the client are also discussed.
AB - 90 practicing auditors were given identical sets of financial statements except for the amount of contingent liability which was varied independently over three amounts of $50,000, $500,000 and $1 million. Based on this information, they were to indicate on a 7-point rating scale anchored by 1 (little likelihood) to 7 (great likehhood), their likelihood of issuing an unqualified, i.e., clean, report. 65 useable responses were received. In accordance with the theory of tolerance for ambiguity, it was hypothesized that auditors who were rated on the MacDonald AT-20 scale as being intolerant of ambiguity would have less preference for an unqualified audit report at higher amounts of contigent liability than auditors who were rated as being tolerant of ambiguity. A between-subjects analysis of variance showed that the auditors' tolerance for ambiguity interacted with different amounts of contingent liability to affect the likelihood of their issuing an unqualified report. Implications in terms of auditors' avoidance of litigation by the client are also discussed.
UR - http://www.scopus.com/inward/record.url?scp=0346614582&partnerID=8YFLogxK
U2 - 10.2466/pr0.1997.81.3.935
DO - 10.2466/pr0.1997.81.3.935
M3 - Article
AN - SCOPUS:0346614582
SN - 0033-2941
VL - 81
SP - 935
EP - 944
JO - Psychological Reports
JF - Psychological Reports
IS - 3
ER -