Partner rotation or extended rotations? The effect of confirmation bias and motivated reasoning bias on objectivity and independence: A framework

Lei Dong, University of IdahoFollow
Robert Sarikas, Eastern Washington UniversityFollow
Arsen Djatej, Eastern Washington UniversityFollow

Abstract

We propose a two-dimensional audit rotation framework on auditors’ rotation that contributes to the discussion on the potential impact of alternatives to strengthen and maintain unbiased attitude, objectivity, and independence. According to the conceptual outlines of this framework, auditors’ objectivity and independence might be enhanced by dealing with confirmation bias and motivated reasoning bias. In this study, we outline and propose potential academic inquiries that could be addressed and tested under this framework. We draw upon research on accounting, auditing, psychology, and economics to discuss the potential consequences of different audit rotation alternates on auditors’ objectivity and independency. A framework is proposed with two-dimensional effects: confirmation bias and motivated reasoning bias. The research implications of the framework indicate that, to varying degrees, various audit rotation arrangement alternatives to the current partner-only rotation mandate in the U.S. could potentially enhance auditors’ objectivity and independency by mitigating confirmation bias and motivated reasoning bias, thus producing more objective and independent audit opinions. This study fills the void in the literature by providing a two-dimensional framework to the current literature of audit rotation for categorizing and comparing different audit rotation alternatives. The framework also enables us to shed light on the relative efficacy of different rotation arrangements on auditors’ objectivity and independence.

Keywords

audit rotation, confirmation bias, motivated reasoning bias, firm rotation, accounting research, auditing research, objectivity, independence

Chinese Abstract

审计合伙人轮换或延长轮换？确认偏差和动机推理偏差对客观性和独立性影响的框架

我们提出了一个关于审计师轮换的二维审计轮换框架，此框架有助于讨论替代方案对加强和保持公正态度，客观性和独立性的潜在影响。根据此框架的概念性纲要，审计师的客观性和独立性可通过处理确认偏差和动机推理偏差得到加强。本研究中，我们提出了在此框架下可以解决和检验的潜在学术问题。我们借鉴了会计学、审计学、心理学和经济学的研究，讨论了不同审计轮换方式对审计师客观性和独立性的潜在影响，借此提出了一个具有二维效应的框架：确认偏差和动机推理偏差。该框架的研究意义表明，在美国现行的仅限于合伙人轮换制度之外，各类审计轮换安排替代方案在不同程度上可通过减少确认偏差和动机推理偏差以提高审计师的客观性和独立性，从而产生更加客观和独立的审计意见。本研究提出的二维框架对不同的审计轮换方案进行分类及比较，填补了审计轮换文献的空白，并有助于理解不同的轮换安排对审计师的客观性和独立性的相对影响。

关键词：审计轮换，确认偏差，动机推理偏差，事务所轮换，会计研究，审计研究，客观性，独立性

DOI

10.5038/2640-6489.4.2.1070

Recommended Citation

Dong, L., Sarikas, R., & Djatej, A. (2019). Partner rotation or extended rotations? The effect of confirmation bias and motivated reasoning bias on objectivity and independence: A framework. Journal of Global Business Insights, 4(2), 156-168. https://www.doi.org/10.5038/2640-6489.4.2.1070