Do Stronger Wise-Thinking Dispositions Facilitate Auditors' Objective Evaluation of Evidence When Assessing and Addressing Fraud Risk?*

Billy E. Brewster, Alex J. Johanns, Mark E. Peecher, Ira Solomon

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


The objective evaluation of evidence is imperative for audit effectiveness and the proper exercise of professional skepticism. However, numerous studies suggest that auditors fail to evaluate evidence objectively when assessing or addressing the risk of material misstatement due to fraud. We develop theory to predict that auditors do evaluate evidence objectively but only when they have stronger wise-thinking dispositions (WTDs), a construct that is new to the audit literature. We define WTDs as the tendency of individuals to naturally engage in the balanced revision of beliefs and doubts about target phenomena by thinking openly and reflectively about evidence. We report prediction-consistent results from two experiments that measure the strength of participants' WTDs and manipulate whether the underlying evidence is less or more indicative of fraud. The experimental results also document that auditors vary considerably in WTD strength and collectively demonstrate the reproducibility of audit judgment-quality benefits of stronger WTDs. We further validate the WTD construct in auditing using confirmatory bi-factor analyses to show that it has one higher-order general factor along with several subfactors. Overall, our theory and results advance the literature by identifying WTDs as a determinant of auditors' ability to objectively evaluate evidence. In addition, our findings have implications for standard setters and audit firms as quality control standards and audit working paper review processes might benefit from revisions that take into account that auditors do not objectively evaluate evidence unless they have stronger WTDs.

Original languageEnglish
Pages (from-to)1679-1711
Number of pages33
JournalContemporary Accounting Research
Issue number3
StatePublished - Sep 1 2021

Bibliographical note

Publisher Copyright:
© 2021 The Authors. Contemporary Accounting Research published by Wiley Periodicals LLC on behalf of Canadian Academic Accounting Association.


  • earnings management
  • fraud risk
  • professional skepticism
  • risk of material misstatement
  • wise-thinking disposition

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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