Auditor Reputation Building

This paper reports the results of an experimental economics study designed to examine reputation building by information verifiers (auditors). The results identify boundary conditions to reputation formation and supply insight into auditors' incentives to form reputations. Reputations form in a...

Full description

Saved in:
Bibliographic Details
Published in:Journal of accounting research 2001-12, Vol.39 (3), p.599-617
Main Author: Mayhew, Brian W.
Format: Article
Language:English
Subjects:
Audit quality
Auditors
Auditors opinions
Audits
Boundary conditions
Equilibrium
Experiments
Financial investments
Financial management
Incentives
Investment strategies
Investors
Management audits
Market equilibrium
Nash equilibrium
Public image management
Reputation
Reputations
Robots
Studies
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper reports the results of an experimental economics study designed to examine reputation building by information verifiers (auditors). The results identify boundary conditions to reputation formation and supply insight into auditors' incentives to form reputations. Reputations form in all sessions of treatments that supply nearly immediate rewards to participants who adopt reputation equilibrium strategies. In contrast, reputations form in less than half of the sessions of a treatment where participants have to maintain reputation equilibrium strategies for number of periods before the market rewards their effort. The results suggest the immediacy of rewards for adopting reputation strategies is a critical determinant of reputation formation.
ISSN:0021-8456
1475-679X
DOI:10.1111/1475-679X.00030