RISK ASSESSMENT JUDGMENTS OF AUDITORS AND BANK LENDERS: A COMPARATIVE ANALYSIS OF CONFORMANCE...

Abstract risk assessment judgments and risk-related perceptions of 164 American auditors and bank lenders are compared using an experimental research design. The auditing work environment is hypothesized to be conducive to more Bayesian risk assessments than the bank lending environment. Results based on an experimental risk assessment task indicate support for this proposition, with perceptual data suggesting there are more incentives for avoiding risk in the bank lending environment than in the auditing environment. More research on factors which impede risk assessments in accordance with Bayes' theorem is advocated.