The Effects of Decision Aid Design on the Information Search Strategies and Confirmation Bias of Tax Professionals

2008 ◽  
Vol 20 (1) ◽  
pp. 131-145 ◽  
Author(s):  
Patrick R. Wheeler ◽  
Vairam Arunachalam
Keyword(s):  
Information Search ◽  
Decision Aid ◽  
Confirmation Bias ◽  
Search Strategies ◽  
Design Features ◽  
Tax Professionals ◽  
Perceived Importance ◽  
Factor Evaluation ◽  
Tax Research

We report the results of a study involving 142 tax professionals designed to investigate the effects of decision aid design on information search (i.e., tax research) and confirmation bias. Results indicate that the participants exhibited confirmation bias when conducting tax research for clients. That is, participants showed a tendency to preferentially select information in support of their earlier recommendations to the client, even when the recommendation disagreed with the client's subsequent tax position. Results also indicate that while some decision aid features can reduce confirmation bias during tax research, others do not and may even enhance this bias. Specifically, a justification requirement decision aid reduced confirmation bias in terms of both the number and perceived importance of selected confirmatory cases, whereas a factor evaluation checklist decision aid either increased the bias (i.e., increased the perceived importance of cases) or had no effect on the bias (i.e., no effect on the number of cases). We suggest several decision aid design features for reducing confirmation bias in tax research.

Confirmation Bias in Tax Information Search: A Comparison of Law Students and Accounting Students

2000 ◽  
Vol 22 (2) ◽  
pp. 60-71 ◽  
Author(s):  
C. Bryan Cloyd ◽  
Brian C. Spilker
Keyword(s):  
Professional Education ◽  
Information Search ◽  
Confirmation Bias ◽  
Law Students ◽  
Accounting Students ◽  
Academic Training ◽  
Tax Professionals ◽  
Conducting Research ◽  
Tax Research ◽  
Tax Practice

Tax professionals frequently perform research to evaluate the strength of client favorable tax positions. Prior research suggests that when performing research, tax professionals tend to focus their attention on precedents with conclusions consistent with their client's preferred outcome and attend less to precedents with conclusions inconsistent with this outcome. This confirmation bias causes professionals to be overly optimistic about the strength of the authoritative support for clientpreferred positions. Despite the potential problems that may arise with confirmation bias, research has yet to consider factors that may mitigate this behavior. Using an experiment that compares the information search behaviors of law students and accounting students, this study provides evidence that the nature of academic training influences the extent to which tax researchers are subject to confirmation bias. Specifically, we find that when conducting research to resolve an ambiguous tax issue, law students are less prone to the bias in certain situations than are Masters of Accounting students. The finding that training may mitigate confirmation bias in tax research has implications for tax professional education and tax practice.

The Influence of Biased Tax Research Memoranda on Supervisors' Initial Judgments in the Review Process

2004 ◽  
Vol 26 (1) ◽  
pp. 1-19 ◽  
Author(s):  
John A. Barrick ◽  
C. Bryan Cloyd ◽  
Brian C. Spilker
Keyword(s):  
Review Process ◽  
Confirmation Bias ◽  
Theoretical Framework ◽  
The Other ◽  
Other Hand ◽  
Tax Professionals ◽  
Realistic Possibility ◽  
Client Advocacy ◽  
Tax Research ◽  
Staff Level

This study experimentally investigates the effects of confirmation bias underlying staff-level tax research on supervisors' initial assessments and recommendations made during the review process for tax research memoranda. The theoretical framework underlying our hypotheses posits that tax professionals strive to make recommendations that meet both accuracy and advocacy objectives. Participants in our study addressed a client scenario in which both objectives could not be met because the client-preferred position did not have a “realistic possibility” of being successfully defended on its merits. In this context, we find that supervisors are more persuaded by an unbiased memo correctly concluding that the client-preferred position is not appropriate than by a biased memo reaching the same conclusion. This result suggests that when tax research memoranda are not consistent with the client advocacy objective, professionals are more persuaded by memoranda that fulfill their accuracy objective. On the other hand, we also find that supervisors are more persuaded by a biased memo incorrectly concluding in favor of the client's preferred position than by a biased memo correctly concluding that the client-preferred position is inappropriate. This result suggests that, when neither memorandum meets the accuracy objective, supervisors are more persuaded by memoranda that offer encouragement that their advocacy objective might be met than by those that do not. Finally, results also indicate that supervisors act to correct confirmation bias by requesting more rework of staff who prepare biased memos than of staff who prepare unbiased memos.

The Interactive Effect of Time Pressure and Client Preference on Tax Professionals' Information Search Emphasis, Judgments, and Recommendations

2021 ◽  
Vol 43 (2) ◽  
pp. 87-105
Author(s):  
Robert A. Ewing ◽  
Brian C. Spilker
Keyword(s):  
Information Search ◽  
Time Pressure ◽  
Interactive Effect ◽  
Confirmation Bias ◽  
Decision Bias ◽  
Client Preference ◽  
Tax Professionals ◽  
Evidential Support ◽  
Decision Making Processes ◽  
Biasing Effects

ABSTRACT Tax professionals commonly search large databases of information to identify tax authority necessary to provide compliance and planning advice to clients. Prior research indicates tax professionals' information search processes are subject to confirmation bias in the direction of client preferences and that this bias can lead professionals to make overly aggressive recommendations. However, very little is known about how time pressure may affect tax professionals' judgment and decision-making processes. This study contributes to practice and to the time pressure and decision bias literatures by providing theory and evidence that increasing time pressure leads to confirmation bias during tax information search and that time pressure enhanced confirmation bias affects recommendations through professionals' assessments of the evidential support for the client-preferred position. With an understanding of how time pressure can influence confirmation bias in information search, professionals and their firms can take steps to manage time pressure and its potential biasing effects.

The Influence of Client Preferences on Tax Professionals' Search for Judicial Precedents, Subsequent Judgments and Recommendations

1999 ◽  
Vol 74 (3) ◽  
pp. 299-322 ◽  
Author(s):  
C. Bryan Cloyd ◽  
Brian C. Spilker
Keyword(s):  
Information Search ◽  
Income Tax ◽  
Confirmation Bias ◽  
Psychological Research ◽  
Professional Standards ◽  
Tax Professionals ◽  
Tax Returns ◽  
Federal Income Tax ◽  
Client Advocacy ◽  
Advocacy Role

Tax professionals provide valuable services to clients by reducing uncertainty about how clients should report transactions on their tax returns. To reduce uncertainty, tax professionals research applicable authorities (e.g., judicial precedents) and provide assessments to clients of the level of authoritative support for client-favorable positions. Tax professionals have strong incentives to make accurate assessments of the strength of client-preferred positions so that clients will understand the level of risk associated with the reporting position. Further, tax professionals must make accurate assessments of authoritative support in order to maintain compliance with tax professional standards and Federal income tax regulations. Incentives notwithstanding, psychological research on confirmation bias suggests that tax professionals' client advocacy role may inhibit professionals' ability to search objectively for relevant tax authority which, in turn, might inhibit their ability to accurately assess authoritative support. We report the results of two studies that examine causes and effects of confirmation bias in tax information search. In study 1, we find that subjects' information searches emphasized cases with conclusions consistent with the client's desired outcome (i.e., positive cases) over cases inconsistent with the client's desired outcome (i.e., negative cases), despite the fact that positive cases were no more similar to the client's facts. Additional analyses indicate that the extent of this confirmation bias was positively related to their assessments of the likelihood that a neutral court would resolve the issue in the client's favor and this in turn increased the strength with which they recommended the client's preferred tax position. Results of study 2 indicate that confirmation bias induced by client preferences can be strong enough to not only result in inaccurate assessments of authoritative support for the client-favored position, which is problematic in and of itself, but also to lead tax professionals to make overly aggressive recommendations.

Do Auditor Advocacy Attitudes Impede Audit Objectivity?

2016 ◽  
Vol 32 (1) ◽  
pp. 136-151 ◽  
Author(s):  
Robin Pennington ◽  
Jennifer K. Schafer ◽  
Robert Pinsker
Keyword(s):  
Information Search ◽  
Confirmation Bias ◽  
Search Strategies ◽  
Important Link ◽  
Big 4 ◽  
Audit Evidence ◽  
Evaluation Of Evidence

Biased evaluation of evidence exists when an auditor either over-emphasizes evidence that supports management assertions or over-emphasizes evidence against management assertions. This study examines if an auditor’s advocacy attitudes lead to bias in information search for audit evidence. We measure the range of advocacy attitudes of individual auditors and hypothesize that auditors at either end of the advocacy spectrum may impede the objectivity of evidence gathered. Results from 60 Big 4 auditors indicate that advocacy attitudes affect both initial judgments and consequent search strategies of auditors. When initial judgments are client-favorable, all auditors exhibit search strategies focused on finding evidence to take a more conservative position; however, when initial judgments represent an unfavorable client position, auditors with lower advocacy attitudes exhibit a stronger tendency to search for additional evidence against a client-favorable position, consistent with a confirmation bias. Conversely, auditors with more neutral attitudes plan a more objective search effectively mitigating the bias. Aggregate findings establish an important link between bias and information search that may manifest itself in auditor training procedures and be of interest to auditing regulators.

scholarly journals INFORMATION SEARCH BEHAVIOR AND TAX CONSULTANTS’ RECOMMENDATION: EXPERIMENTAL EXAMINATION ON THE ROLE OF SOCIAL NORMS

2020 ◽  
Vol 21 (1) ◽  
pp. 115-135
Author(s):  
Fauzan Misra ◽  
Slamet Sugiri ◽  
Eko Suwardi ◽  
Ertambang Nahartyo
Keyword(s):  
Information Search ◽  
Social Norm ◽  
Confirmation Bias ◽  
Search Behavior ◽  
Tax Compliance ◽  
Client Preference ◽  
Tax Professionals ◽  
Information Search Behavior ◽  
Confirmatory Behavior ◽  
The Way

This study examines the influence of client preference with respect to information search behavior and subsequent tax recommendation. Prior studies have identified that tax consultants exhibit confirmation bias in their information search processes, which is explained by the theory of motivated reasoning (Kunda, 1990). However, that theory does not take into consideration responses of tax consultant that are attributable to the way clients present their preferences. This study fills the gap by proposing a social norm activation model which can help to foster a better understanding of the nature of the confirmatory behavior. To accomplish this purpose, study participants role-played as advisors on a tax compliance task. The experiment used aweb-based instrument that involved 82 tax professionals. Results showed that tax consultants engaged inlower confirmation bias when they received an explicitly preference statement from their client than those who received an implicit statement. Furthermore, the former tax consultants recommended a more conservative tax position than the latter. These findings underscore the importance of social norm in a professional tax work environment. As a practical contribution, these findings suggest that the beliefs and norms of tax professionals influence the way they do their work.

scholarly journals ACCOUNTABILITY PRESSURE AS DEBIASER FOR CONFIRMATION BIAS IN INFORMATION SEARCH AND TAX CONSULTANT’S RECOMMENDATIONS

2019 ◽  
Vol 34 (1) ◽  
pp. 80 ◽  
Author(s):  
Fauzan - Misra
Keyword(s):  
Information Search ◽  
Research Method ◽  
Experimental Approach ◽  
Confirmation Bias ◽  
Search Behavior ◽  
Simple Effect ◽  
Tax Professionals ◽  
Search Processes ◽  
Mitigating Factors ◽  
Information Search Behavior

Introduction: This study examines the influence of accountability pressure toward information search behavior and the subsequent tax recommendation.  Background Problem: Prior research has shown that tax consultants are subject to confirmation bias during their information search when providing recommendations to their clients. Nevertheless, less attention has been given to identifying boundary condition or mitigating factors. This study proposes accountability pressure to mitigate such bias. Novelty: This study broadens the understanding of the effect of different accountability pressures on an individual’s effort and judgement making. Research Method: The research was conducted by an experimental approach using a 1x2 between-subjects design using an Internet-based instrument. Accountability pressure is manipulated into 2 levels (strong or weak). The experiment involved 82 tax professionals. Findings: The results show that accountability pressures influence the depth of the consultant information search. That is, a tax consultant those faced a high accountability pressure performed a deep search, while those who faced a weak accountability pressure conducted a shallow search. Then, a deep search leads to more conservative recommendations, while a shallow search leads to an aggressive recommendation. Furthermore, the results of interaction and simple effect tests show that the information search depth can mitigate confirmation bias occurred during information search processes. Conclusion: These findings imply that accountability within the organization needs to get more attention from tax consultants. While any prior research found that confirmation bias was proofed to have pervasive character and hard to be eliminated,  this study pointed out that the accountability pressure could mitigate such bias.

Knowledge, Adaptivity, and Performance in Tax Research

2005 ◽  
Vol 80 (2) ◽  
pp. 703-722 ◽  
Author(s):  
Anne M. Magro
Keyword(s):  
Decision Making ◽  
Information Search ◽  
Research Performance ◽  
Institutional Knowledge ◽  
Tax Professionals ◽  
Extensive Information ◽  
And Performance ◽  
Tax Research ◽  
Tax Practice ◽  
Decision Tasks

The ability to adapt decision making to the features of decision tasks and contexts is likely an important component of professional decision making, but not all professionals will exhibit this adaptivity. One explanation for decision makers' failure to adapt when adaptivity is appropriate is that they do not possess relevant knowledge of the features of decision tasks and contexts, or institutional knowledge. In this study, I examine the relations between institutional knowledge, information search adaptivity, and performance using an experimental research design in the tax decision-making setting. The results of the study are consistent with predictions. Tax professionals with relevant institutional knowledge responded to the differential features of the taxplanning and compliance contexts by conducting broader and more extensive information search in planning than in compliance; professionals lacking institutional knowledge did not exhibit such information search adaptivity. In addition, tax research performance increased with information search adaptivity, and that adaptivity mediated the relation between institutional knowledge and tax research performance. This study extends the accounting and psychology adaptivity literatures and contributes to tax practice and education.

Decision Aids for Generating Analytical Review Alternatives: The Impact of Goal Framing and Audit-Risk Level

2002 ◽  
Vol 14 (1) ◽  
pp. 157-177 ◽  
Author(s):  
Jennifer M. Mueller ◽  
John C. Anderson
Keyword(s):  
High Risk ◽  
Cognitive Load ◽  
Information Search ◽  
Decision Aid ◽  
Decision Aids ◽  
Risk Level ◽  
Audit Risk ◽  
Goal Framing ◽  
Analytical Review ◽  
The Impact

An auditor generating potential explanations for an unusual variance in analytical review may utilize a decision aid, which provides many explanations. However, circumstances of budgetary constraints and limited cognitive load deter an auditor from using a lengthy list of explanations in an information search. A two-way between-subjects design was created to investigate the effects of two complementary approaches to trimming down the lengthy list on the number of remaining explanations carried forward into an information search. These two approaches, which represent the same goal (reducing the list) but framed differently, are found to result in a significantly different number of remaining explanations, in both low- and high-risk audit environments. The results of the study suggest that the extent to which an auditor narrows the lengthy list of explanations is important to the implementation of decision aids in analytical review.

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