The effects of independent expert recommendations on juror judgments of auditor negligence

Jonathan H. Grenier, David Lowe, Andrew Reffett, Rick C. Warne

Research output: Contribution to journalArticle

16 Scopus citations

Abstract

Audit firms claim that they are subject to unreasonable litigation risk and that legal reforms are needed. One frequently proposed reform is to utilize independent (i.e., court-appointed) experts to examine case facts and provide recommendations to the court. This study provides theory and evidence to examine the general effects of such recommendations on jurors’ judgments and, also, more specifically, to inform critics’ concerns that jurors will merely “rubber stamp” independent experts’ recommendations. Results of an experiment indicate that independent experts’ recommendations shift jurors’ judgments in the direction of the recommendation, but that such effects depend on jurors’ perceptions of the experts’ credibility. Further, consistent with critics’ concerns, independent experts’ recommendations reduce jurors’ sensitivity to specific case facts in some, but not all, contexts. Specifically, when the experts conclude that the auditors were negligent, jurors’ negligence judgments are insensitive to variation in specific case facts (the auditors’ use versus nonuse of a specialist), but are sensitive to such variation when the experts conclude that the auditors were not negligent. Implications for theory, practice, and regulation are discussed.

Original languageEnglish (US)
Pages (from-to)157-170
Number of pages14
JournalAuditing
Volume34
Issue number4
DOIs
StatePublished - Nov 1 2015

Keywords

  • Auditor litigation
  • Auditor negligence
  • Expert recommendations
  • Nonmeritorious judgments

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

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