The Impact of Risk and Loss on the Demand for Audit Quality
To examine the factors affecting the demand for audit quality from the perspective of managers, is an interesting topic. Our research investigates the effect of risk and loss on managers’ demand for audit quality.
We have utelized an experimental method with2*2 between subjects factorial design. Manipulated variables are risk and loss. The sample consists of 88 subjects including professionals and academics randomly assigned to four groups.
Our results show that in the presence of risk, managers’demand for audit quality decreases. Also, if there is potential loss for the company, managers are less likely to demand for high audit quality.
The existence of risky conditions and the potential for loss increase the likelihood of misreporting. This reduces managers’demand for high quality services. Through identifying psychological factors affecting the demand for audit quality, we provide valuable information in the field of audit quality and judgment and decision-making in accounting.
Audit quality , dark triad , Guilt Proneness , Loss , risk
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