SUMMARY: We examined whether auditors’ attitudes toward the evidence in the going concern setting may be driven by their expectations of the self-fulfilling prophecy effect. Following previous research on motivated reasoning, we assumed that the self-fulfilling prophecy effect could be interpreted as a potential motivational/incentive factor supporting auditors’ reluctance to issue going concern opinions. The belief-adjustment model of Hogarth and Einhorn (1992) was used to estimate auditors’ attitudes toward confirming and disconfirming evidence by manipulating, in a laboratory experiment, order of evidence and framing (viability versus failure), and capturing auditors’ expectations of the self-fulfilling prophecy effect. Our results indicate that auditors’ expectations of the self-fulfilling prophecy affected their attitudes toward confirming and disconfirming evidence. Further, we specifically find that auditors with higher expectations of the self-fulfilling prophecy had a greater sensitivity to mitigating evidence and, at the same time, a lower tendency to favor contrary evidence.
Belief Adjustment Model with self-review debiaser presentation patterns on investment decision making