Estimation risk occurs when individuals form beliefs about parameters that are unknown. We examine how auditors respond to the estimation risk that arises when they form beliefs about the likelihood of client bankruptcy. We argue that auditors are likely to become more conservative when facing higher estimation risk because they are risk-averse. We find that estimation risk is of first-order im...

It is recognised that the fact of auditor independence is generally unobservable and therefore it is only normally when cases of audit failure arise that evidence of lack of independence in fact emerges. However, in advance of investigators’ judgments on the conduct of the audit, the Enron affair and subsequent collapse of Andersen has emphasised the significance of confidence in independence i...

Cyber-physical-social system (CPSS) allows individuals to share personal information collected from not only cyberspace, but also physical space. This has resulted in generating numerous data at a user’s local storage. However, it is very expensive for users to store large data sets, and it also causes problems in data management. Therefore, it is of critical importance to outsource the data to...

The reality and perception of auditor independence is fundamental to public confidence in financial reporting. A new Independence Standards Board was set up in the U.S. in 1997 and the European Union (EU) is currently seeking to establish a common core of independence principles (EC Green Paper 1996). This paper explores, using a questionnaire instrument, U.K. interested parties' perceptions of...

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