Knowledge that Transforms

Abstract Audit firms hesitate to take full advantage of data and analytics (D&A) audit approaches because they lack certainty about how external reviewers evaluate those approaches. We propose that external reviewers use an effort heuristic when evaluating audit quality, judging less effortful audit procedures as lower quality, which could shape how external reviewers evaluate D&A audit procedures. We conduct two experiments in which experienced external reviewers evaluate one set of audit procedures (D&A or traditional) within an engagement review, while holding constant the procedures' level of assurance. Our first experiment provides evidence that external reviewers rely on an effort heuristic when evaluating D&A audit procedures—they perceive D&A audit procedures as lower in quality than traditional audit procedures because they perceive them to be less effortful. Our second experiment confirms these results and evaluates a theory‐based intervention that reduces reviewers' reliance on the effort heuristic, causing them to judge quality similarly across D&A and traditional audit procedures.

ABSTRACT Management control systems (MCS) have been known to produce unintended, dysfunctional consequences. However, relatively little is known about how MCS can contribute to the inertia and even decline of a firm. Our analysis in the abductive mode was triggered by a surprising case study observation that although Nokia Mobile Phones (NMP) certainly had many capabilities that could have facilitated a timely response to disruptive environmental change, this did not happen. In developing an explanation for this, we draw on the managerial cognitions literature, showing how the cognitions at NMP, developed in the era of organizational success, became embedded in its MCS. This embeddedness, in turn, intensified existing cognitions. As the cognitions became less accurate over time, the once effective MCS started to cause various inertial effects, such as suboptimal and slow decision‐making. We contribute to the literature on the dysfunctional consequences of MCS by theorizing how MCS can contribute to inertia via cognitions in two ways: first, by reinforcing prevailing cognitions and hence preventing management from realizing a need for change; and second, by moderating the impact cognitions have on actions by delaying actions based on renewed cognitions. Both ways may be fatal, especially in hyper‐competitive contexts.

ABSTRACT This study critically evaluates research published by Contemporary Accounting Research ( CAR ) between 1984 and 2021 using bibliometric analysis. We examine the following: (i) CAR 's publication quality and the factors associated with its citations and (ii) CAR 's scope regarding research diversity, methods, authors geographical dispersion, and collaborative networks. The methodology permits observation of finer collaboration details and research patterns not apparent by simply categorizing the data. We use tools such as performance analysis, coauthorship analysis, bibliographic coupling, and regression analysis. The bibliometric analysis shows improvement in CAR 's CiteScore and source‐normalized impact per paper over time, consistent with publishing high‐quality research. Our analysis reveals that authors' geographical affiliations, research subject areas, and research methods are not systematically associated with citations across our various subsamples. A notable exception is that research on audit topics generates more citations than studies examining financial accounting topics. Other factors significantly and positively associated with citations include article age, article length, number of authors, order of author names, and number of references. We also show that CAR has become more diverse regarding author affiliations, subject areas, and research methods than most leading accounting journals. Only Accounting, Organizations and Society emerges as more diverse, thereby serving as a benchmark for CAR in the future. CAR should consider focusing on high‐interest areas to boost citations and tightening its acceptance criteria.

Abstract The Sarbanes‐Oxley Act charges management with the primary responsibility for internal control over financial reporting (ICFR). However, prior research tells us little about the ICFR process from management's perspective. We develop a theoretical model of the ICFR process from management's perspective and examine that model by surveying 145 and interviewing 35 accounting executives at large US public companies. Our primary finding is that executives feel constrained in their ability to direct ICFR and hold perspectives that reflect these constraints. Specifically, most executives feel compelled by auditors to follow the PCAOB's preferences even though executives believe these preferences often tend to distract management and auditors from riskier areas. Executives also believe that audit committees' involvement in ICFR is too passive and that auditors' assessments are sometimes too severe, prompting executives to push back on auditors. Overall, executives strive to make decisions that are optimal for their ICFR, but limited resources and other business conditions, such as restructuring events and lack of qualified personnel, limit the effectiveness of their ICFR efforts. We discuss the implications of our results for practitioners, regulators, and researchers.