Corporate Governance And The Unconscious Intrusion of Bias

January 2003

Speaker:

Assistant Professor Don Moore, AGSM

Unbiased information about the financial health of public companies provided by auditors ideally allows investors to make informed decisions and enhances the efficiency of financial markets. However, under the current system auditors are hired and fired by the companies they audit, and accounting firms often provide lucrative services in addition to auditing. These institutional features raise the issue of auditor independence; i.e., whether audits are biased in favour of the audited companies. A series of experiments demonstrated that auditor judgments are likely to be biased. These experiments also revealed that these biases were not easily corrected because auditors may not be fully aware of them. Assistant Professor Moore discusses the implications of this for both the practice and regulation of auditing.

Assistant Professor Moore works within the Organizational Behaviour Department at Carnegie Mellon University's Graduate School of Industrial Administration. His research has appeared in Harvard Business School, Organization Behaviour and Human Decision Processes, the Journal of Applied Psychology, the Journal of Economic Behaviour and Organization, American Behavioural Scientist, and the Annual Review of Psychology

Panelists:

Luise Elsing, Manager Listings Sydney, Australian Stock Exchange.
Jim Butler, Director, Investment Banking, NM Rothschild & Sons Ltd.