Primacy Effects and the Role of Risk in Auditor Belief-Revision Processes

Numerous studies in the audit judgment literature provide evidence indicating that auditors can be susceptible to recency effects. This study extends the research by examining auditor susceptibility to primacy, an order effect, which, like recency, can lead to suboptimal audit‐planning decisions (see Ashton and Ashton 1988) and yet, unlike recency, has received very little attention in the accounting literature. Specifically, the research investigates whether primacy effects in auditor belief revisions are a conditional function of the level of inherent risk present in the audit environment (high/low) and the nature of the information contained in the latter portion of the information sequence (e.g., whether the information is positive or negative with respect to the client's internal controls). The results, consistent with expectations, indicate that auditors are susceptible to primacy effects when making likelihood of error and audit‐hour planning judgments in settings that are relatively low in inheren...