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Contrasting Public Perceptions of Government versus Certified Public Accounting Firm Oversight of Relief Packages
Abstract
This study examines public perceptions of potential overseers charged with ensuring that relief packages are distributed to the intended audience. In an experiment, we assess perceptions of trustworthiness and fraud reduction ability between government and public accounting firm employees in the context of relief package oversight. While actual ability is important, public perceptions of overseer ability is also essential for relief packages to be fully effective. We find that people, regardless of their political party affiliation, rate public accounting firm employees as more trustworthy and better able to reduce fraud than government employees. For government oversight, participant political party affiliation influences perceptions of employee ability and is mediated by general trust in government. These findings suggest public accounting firms are a viable alternative to increase public perceptions that relief packages are distributed effectively. Initial evidence suggests educating the public on the role of career government employees may raise public opinion.
Data Availability: Data are available from the authors upon request.
JEL Classifications: H12, H84, M41, M48.
... B. Rixom, J. Rixom, Pippin, and Wong (2021) To examine public perceptions of potential overseers charged with ensuring that relief packages are distributed to the intended audience. ...
The global pandemic has highlighted unprecedented levels of uncertainty, which has forced the exploration of new questions. We review the academic literature on COVID-19, with respect to forensic accounting topics, and we find that the literature is relatively scarce. We also provide a detailed constitutional legal history of U.S. health mandates, including a background of constitutional limitations on government power, federalism, Supreme Court evolution on autonomy, and the state of the legal framework on government health mandates immediately preceding the COVID-19 pandemic. Throughout this review of academic literature and the legal framework regarding mandates, we discuss examples of fraud cases during the pandemic and the aspects impacting fraud rationalization and pressures. Our results show that more research is needed in this area, and we provide suggestions for future avenues, as well as legal considerations regarding government mandates.
The novel coronavirus (COVID‐19) situation provides new insights into how macroeconomic shocks affect investors’ processing of firm disclosures. This study focuses on the market reactions to mandatory firm disclosures, that is, earnings announcements and the unique practice of monthly sales disclosure in the Taiwanese stock market, and seeks to provide evidence that timely sales information attracts more incremental investor attention than earnings news after a sudden shock. This study finds decreased (increased) market reaction to earnings news (monthly sales news) during the turmoil period of the stock market than during the pre‐ and post‐turmoil periods. I further explore the effects of stock market conditions on the market reaction to the firm disclosures. I observe that a shrinking market leads to lesser (greater) investors’ attention on earnings news (monthly sales news) than a soaring market does. These results imply that the market demand on the earnings or monthly sales news depends on investors’ relative risk aversion. In addition, this study provides evidence that the trade‐off between the market reaction to earnings and monthly sales news seems to be temporary, however, the market reaction to the news had not returned to pre‐crisis levels during the sample period of this study. This paper shows that the increased decision usefulness of timely monthly sales information may supplement the decreased decision usefulness of earnings news during a negative macroeconomic event.
In this paper, we conduct a comprehensive review of different economic policy measures adopted by 166 countries as a response to the COVID-19 pandemic and create a large database including fiscal, monetary, and exchange rate measures. Furthermore, using principle component analysis (PCA), we construct a COVID-19 Economic Stimulus Index (CESI) that combines all adopted policy measures. This index standardises economic responses taken by governments and allows us to study cross-country differences in policies. Finally, using simple cross-country OLS regressions we report that the median age of the population, the number of hospital beds per-capita, GDP per-capita, and the number of total cases are all significantly associated with the extent of countries’ economic policy responses.
Citizens encounter many street‐level bureaucrats in their lifetime. How do they assess the traits of the bureaucrats they meet? Understanding citizens’ assessments of bureaucrats is important, because citizens are not passive receivers of policies. This article explores citizens’ classifications of street‐level bureaucrats based on their core task. Using a factorial survey (n = 580), three clusters of bureaucrats are identified: those who are regulation oriented, those who are service oriented, and those who are both regulation and service oriented. Then, the article tests how these three types of bureaucrats are assessed on warmth and competence and whether their gender matters. A between‐subjects experiment (n = 1,602) reveals that regulation‐oriented bureaucrats are assessed as least competent and warm. Moreover, regardless of core task, female bureaucrats are assessed as warmer than males. Female and male bureaucrats are assessed as equally competent. This article shows that bureaucrats are stereotyped by citizens and discusses the implications for the public management literature.
Evidence for Practice
• While researchers and practitioners tend to focus on commonalities between street‐level bureaucrats, focusing on differences—for instance, in terms of core task and gender—may be helpful to understand how citizens see and react to their encounters with bureaucrats.
• Much like street‐level bureaucrats’ stereotypical notions of citizens, citizens stereotype the bureaucrats they encounter. These stereotypes are based on cues related to the bureaucrats’ core task and gender.
• Especially for regulation‐oriented organizations and street‐level bureaucrats, such as inspectorates, being aware of stereotypes may be useful when engaging with citizens because they are rated as the least competent and warm.
Despite the scientific consensus concerning the current causes
and future effects of anthropogenic global warming, there has been little to no improvement in public opinion, attitudes, or behavior related to its
mitigation. This article examines how different information conveyance
strategies affect belief in global warming. Three experiments reveal that
a fundamental understanding of the underlying mechanism of global warming—the greenhouse gas effect—is integral to belief in the existence 1.20 of global warming. Specifically, the current research demonstrates that persuasive messaging incorporating an explanation of the mechanism (versus consequences) underlying global warming leads to belief change (study 1); that this effect is moderated by political orientation, such that the effect of mechanism-understanding on global warming belief is greater for conservatives (study 1, 2, and 3); that understanding of the mechanism underlying
global warming affects willingness to engage in sustainable activities and
buying socially conscious products (study 2); and that the effect persists
over time and can influence actual donation behavior (study 3). Social,
public policy, and marketing implications for this strategy are discussed.
Why are politicians so unpopular? One common explanation blames a professionalized political class that is increasingly detached from “ordinary citizens”. But, there is very little empirical investigation of what it is about the professionalization of politics that engenders distrust. This article uses 12 focus groups and 15 interviews with civil servants from the Australian Public Service – ‘insiders’ with first-hand knowledge and experience of the political system – to reflect on political professionalization and its impacts. As a group, civil servants’ views on this question remain largely unexplored yet their proximity to the political process gives them a distinct vantage point from which to reflect on current explanations for rising anti-political sentiment. We find both positive and negative attitudes towards professionalization that destabilize prevailing explanations: on the demand-side, civil servants share first-hand experience and knowledge of how the political process works but remain cynical about politicians; whilst, on the supply-side, they value governing competence more than demographic representation yet still prefer more amateur politicians. Our reflections on these findings highlight contradictory expectations: we want politicians who act like professionals, but who are paid like amateurs.
This paper adds to the literature on historic and current claims to a public interest mandate by professional accountants and their accountancy bodies by examining the insights offered by an analysis of continuing professional development (CPD) policies in the accountancy profession. The accountancy profession claims that these policies serve the public interest. Drawing on public interest theory, the paper examines how the profession has defined and limited the public interest via, and in relation to, CPD and the implications of the CPD policies when considering the profession’s claims to serve the public interest. The CPD policies of twelve professional accountancy bodies are reviewed. This reveals multiple dualisms (input or output, relevant to profession or relevant to current role, individual or employer-focused) and broad spectra (from more reflective to more prescribed and from core to peripheral accounting fields) resulting in multiple permutations that render CPD difficult to conceptualise. The result is that CPD in the accountancy profession exhibits contradictions that result in policies that are logically incoherent. The blurred distinction between a professional accountant’s responsibility as a member of a profession and as a person carrying out an occupational role limits the scope of CPD to adequately protect the public interest.
The target article by John Jost (2017 – this issue) focuses on political ideology (liberalism vs. conservatism) and its association with personal characteristics, cognitive processing style, and motivational interests. Jost's arguments and data are very compelling and will inspire consumer psychologists to do more research in the political domain. To enable this goal further, we complement the target article by focusing on partisanship, another major determinant of political judgments and decisions. Whereas political ideology refers to people being more liberal or conservative, partisanship refers to how strongly people identify with a specific political party (e.g., Republicans or Democrats). In reviewing the literature on partisanship, we concentrate on voting behaviors and attitudes, an area not addressed by Jost, but of great importance for consumer psychologists given the large expenditures on political advertising. Adding to Jost's discussion of the link between political ideology and systematic processing, we examine the interplay between these two constructs and partisanship.
Objective
This study sets out to examine the roles of party identification, political knowledge, education, and media use in citizens’ perceptions of changes in the economy, federal deficit, poverty, and crime rates between 2001 and 2008. It also tests the predictions of motivated reasoning versus Bayesian updating in seeing how (or if) perceptions of the economy changed as conditions worsened during 2008.
Method
This research used American National Election Studies (ANES) panel data in creating regression analyses for perceptions in January and November 2008, with the former as a control for the latter. A repeated‐measures analysis of variance tracked changes in partisans’ perceptions of the economy during the year.
Results
Partisanship was a robust predictor of perceptions. Political knowledge and education tended to promote perceptions that were in the same direction as actual trends, but political knowledge interacted with party identification to promote partisan polarization in perceptions. Television news exposure was the most important media variable, although it promoted pessimism on all trends. As economic conditions worsened throughout 2008, partisans’ perceptions of the economy converged, suggesting that citizens, especially Republicans, updated their perceptions.
Conclusion
The findings for partisanship and its interaction with political knowledge are consistent with the motivated reasoning literature, but the emergence of a bipartisan consensus about the worsening of the economy by the end of 2008 supports Bayesian updating, although it may take pretty undeniable facts for it to work.
Public interest is highly important to the accounting profession because, according to the professions code of ethics, “a label of the accountancy profession is its acceptance of the responsibility to act in the public interest“(IFAC, 2011), but there is not a common consensus on what exactly is in the public interest. In the same time, the accountancy profession includes individuals and private companies profit oriented. In this circumstance, the objective of the paper is to explain the concept of public interest from both sides: the accounting profession, and expectations of the interested parties. For this, a literature review analyzes the main studies in accounting research literature that analyze public interest from a theoretical approach. This study provides an accounting conceptual framework for public interest, based on the definitions of ‘public interest,’ and the dilemma between public and private interest. Also, proposes an evaluation tool of the degree to which any policy, action, process, or condition are in the public interest. The framework and the assessment tool are “designed to provide policymakers, regulators, and business leaders with the means to more consistently assess many of the issues which are currently in debates at the national and international levels. (IFAC, 2011)
In this commentary, we embed the volume's contributions on public beliefs about science in a broader theoretical discussion of motivated political reasoning. The studies presented in the preceding section of the volume consistently find evidence for hyperskepticism toward scientific evidence among ideologues, no matter the domain or contextand this skepticism seems to be stronger among conservatives than liberals. Here, we show that these patterns can be understood as part of a general tendency among individuals to defend their prior attitudes and actively challenge attitudinally incongruent arguments, a tendency that appears to be evident among liberals and conservatives alike. We integrate the empirical results reported in this volume into a broader theoretical discussion of the John Q. Public model of information processing and motivated reasoning, which posits that both affective and cognitive reactions to events are triggered unconsciously. We find that the work in this volume is largely consistent with our theories of affect-driven motivated reasoning and biased attitude formation.
Transparency is considered a key value for trustworthy governments. However, the effect of transparency on citizens’ trust across national cultures is overlooked in current research. This article compares the effect of transparency on trust in government in the Netherlands and South Korea. The effect is investigated in two similar series of three experiments. The authors hypothesize that the effect of transparency differs because the countries have different cultural values regarding power distance and short‐ and long‐term orientation. Results reveal similar patterns in both countries: transparency has a subdued and sometimes negative effect on trust in government. However, the negative effect in South Korea is much stronger. The difference in the magnitude of transparency's effect suggests that national cultural values play a significant role in how people perceive and appreciate government transparency.
The decision to save enhances well-being in the long-term but it conflicts with the desire to spend money to gain immediate gratification. In this research, we examine the influence of having single versus multiple accounts on individuals’ savings and spending decisions. We find that individuals save more with a single account than with multiple liquid accounts. Utilizing work on motivated reasoning and fuzzy-trace theory, we suggest that multiple accounts engender fuzzy gist representations, making it easier for people to generate justifications to support their desired spending decisions. However, a single account reduces the latitude for distortion and hinders generation of justifications to support desirable spending decisions. Across four studies that provide participants with the opportunity to earn, spend, and save money, we demonstrate the proposed effect and test the underlying process.
This research aims to ascertain the professional knowledge and the skills/attributes that are considered important by external auditors for a graduate who intends to be an auditor. For this purpose, we conducted a survey on external auditors in Turkey. The research has two dimensions: skills dimension (twenty one items) and professional knowledge dimension (twenty four items). The results indicated that all skills except “knowledge of accounting software” are perceived to be important or very important for the auditing profession. Among the most important skills that graduates are expected to possess are ethics, teamwork, and honesty. The results also demonstrated that some courses are perceived to be extremely necessary, e.g. Auditing, Microsoft Office Programs, Accounting and Financial Reporting Standards, Financial Statement Analysis, Financial Accounting, Capital Market Board Regulations, Cost Accounting, and Managerial Accounting. In addition, cross analyses indicated that there are significant differences among subgroups based on gender, education, auditing firm, experience, and job title.
This article examines how confirmatory reasoning moderates the impact of attractive and unattractive common features on consumer preferences. Building on the existing research on confirmatory information processing and the motivated reasoning framework, I propose that consumers evaluate common features in a way that supports their already established preferences. In a series of three studies, I show that the impact of common features is moderated by their attractiveness and the strength of individuals' already established preferences. In the context of a choice task, only attractive features were found to enhance individuals' already established preferences, and this effect was more pronounced for consumers with already established brand preferences compared to consumers who were indifferent to the options. The effect of attractive and unattractive features was reversed in the context of a rejection rather than a selection task. These findings are interpreted in the context of consumers' confirmatory reasoning aimed at reaching a consistent and readily justifiable decision. Copyright 2001 by the University of Chicago.
It is proposed that motivation may affect reasoning through reliance on a biased set of cognitive processes--that is, strategies for accessing, constructing, and evaluating beliefs. The motivation to be accurate enhances use of those beliefs and strategies that are considered most appropriate, whereas the motivation to arrive at particular conclusions enhances use of those that are considered most likely to yield the desired conclusion. There is considerable evidence that people are more likely to arrive at conclusions that they want to arrive at, but their ability to do so is constrained by their ability to construct seemingly reasonable justifications for these conclusions. These ideas can account for a wide variety of research concerned with motivated reasoning.
This preliminary study compared the associations between objective and subjective socioeconomic status (SES) with psychological and physical variables among 157 healthy White women, 59 of whom subsequently participated in a laboratory stress study. Compared with objective indicators, subjective social status was more consistently and strongly related to psychological functioning and health-related factors (self-rated health, heart rate, sleep latency, body fat distribution, and cortisol habituation to repeated stress). Most associations remained significant even after controlling for objective social status and negative affectivity. Results suggest that, in this sample with a moderately restricted range on SES and health, psychological perceptions of social status may be contributing to the SES–health gradient.
Scholars often evaluate citizens' democratic competence by focusing on their ability to get relevant facts right. In this article, I show why this approach can yield misleading conclusions about citizen competence. I argue that although citizens with strong partisan loyalties might be forced to accept the same facts, they find alternative ways to rationalize reality. One such way, I show, is through the selective attribution of credit and blame. With four randomized experiments, conducted in diverse national settings and containing closed‐ as well as open‐ended questions, I find that as partisans correctly updated economic beliefs to reflect new facts, they conversely attributed responsibility in a highly selective fashion. Although partisans might acknowledge the same facts, they are apt in seizing on and producing attributional arguments that fit their preferred worldviews.
How distrustful are people of government? Although large majorities of Americans express distrust in government, we propose that most of these same individuals also possess an implicit, gut-level trust in government. Using a common method to measure attitudes that people are either unwilling or unable to self-report, we found that most respondents implicitly trust government and that implicit trust is largely unrelated to explicit trust (as self-reported in surveys) and does not meaningfully vary by party identification or demographic characteristics. We also found that implicit trust is politically consequential, helping illuminate why a distrustful public nevertheless exhibits diffuse support and trust in the government to address crisis events, both foreign and domestic. We conclude that most Americans are of two minds about government, possessing both a positive, implicit trust and negative, explicit trust, and that each type matters in explaining orientations toward government.
Within the field of public economics, there is the perception that Republicans are associated with ‘small government’ and Democrats with ‘big government’. We test this notion by examining whether economic freedom is affected when a single party is in control of the state legislature. We find no link between party control and our main economic freedom indicator, but we do find a positive link between Republican control and the taxation component of economic freedom, suggesting a Republican legislature leads to lower taxation.
It is often assumed that citizens evaluate government based on service quality or outcomes (such as safe neighbourhoods or good schools), but aspects of administrative process (such as fairness and respect) are also important. Using data from two US surveys, this study examines how service quality and administrative process influence citizens’ evaluations of government. Results indicate that service quality matters most to ratings of the community; in contrast, administrative process is the dominant driver of trust; and both quality and process have large effects on judgements about government’s overall job performance. Implications for public management research and practice are discussed.
This article analyzes the relationship between political trust, ideology, and public support for government spending. We argue that the political trust heuristic is activated when individuals are asked to sacrifice ideological as well as material interests. Aggregate- and individual-level analysis shows that the effects of political trust on support for government spending are moderated by ideology. Consistent with the unbalanced ideological costs imposed by requests for increased government spending, we find that the effects of political trust are significantly more pronounced among conservatives than among liberals. The analysis further demonstrates that ideology conditions the effects of political trust on attitudes toward both distributive and redistributive spending. Our findings suggest that political trust has policy consequences across a much broader range of policy issues than previously thought.
Audit fees of Big 6 and non-Big 6 accounting firms are examined for 348 publicly listed Hong Kong companies. Using more recent data than prior studies, we find evidence of Big 6 premiums for both general brand name and for industry specialization. In addition, we find that the large local firm Kwan Wong Tan & Fong, which is the market leader in the property sector, has significantly lower fees than both Big 6 and other non-Big 6 auditors in that industry. Specialization thus leads to different results for Big 6 and non-Big 6 firms and suggests a market segment not previously identified: non-Big 6 specialization, which leads to production economies and the capture of market share through lower fees for a clientele seeking low-priced audits. These results also suggest that prior studies do not recognize sufficiently that Big 6 brand-name reputation is a necessary foundation on which to achieve higher priced quality-differentiated audits based on industry specialization.
The purpose of this study is to investigate the relative influence of industry- and task-based experience on auditor performance. Prior research has shown that both forms of experience can be beneficial, but studies thus far have not clarified their relative importance. Non-specialist auditor participants are used as they gain task experience across a range of industries, making it possible to disentangle the impact of each on performance. The literature indicates that the knowledge gained from industry-based experience can be applied to unfamiliar tasks set within a familiar industry context. Results from a behavioral experiment indicate that, as expected, industry-based experience has a more significant impact on auditor performance than task-based experience. Performance gains through industry experience are found to occur quickly and then level out. Reported results have implications for audit staff allocations to optimize auditor performance.
JEL Classifications: M42.
Data Availability: Data and the tasks used in this study are available on request.
Protection of outside investors depends on the detection and punishment of resource diversion by managers and controlling shareholders. We focus on the role played in investor protection by self-interested auditors operating in a competitive audit market. In our setting, auditors represent the mechanism whereby detection of diversion occurs. We show that markets with relatively greater auditor penalties for audit failures and greater insider penalties for detected resource diversion have larger total investment levels, a higher proportion of the firm held by outsiders, higher audit effort, higher audit fees, and higher expected payoffs for both auditors and insiders.
I estimate the influence of political parties on state Tax Burdens over a 40-year period (1960–2000). Holding constant a large number of state and voter characteristic variables, I find that: (i) Tax Burdens are higher when Democrats control the state legislature compared to when Republicans are in control. (ii) The political party of the governor has little effect after controlling for partisan influences in the state legislature. I explain how both findings are consistent with median voter theory. My results suggest that after 5 years of Democratic control of the legislature, state government would be approximately 3–5% larger than if Republicans controlled the legislature during that same period, with the better specifications producing estimates in the higher end of this range.
This research is concerned with task-oriented decision situations where the decision maker faces two options, one superior on a factor directly related to the given task (called the A factor) and the other superior on a factor not central to the accomplishment of the task but tempting to the decision maker (called the B factor). According to the elastic justification notion, the decision maker may find it unjustifiable to choose the B-superior option over the A-superior option if there is no uncertainty in the A values of the two options, but will construct a justification and become more likely to choose the B-superior option if there is uncertainty. In support of this proposition, two experiments employing a simulated decision situation found that subjects were indeed more likely to choose the B-superior option when there was uncertainty in the A factor than when there was not, no matter whether the uncertainty resided in one of the options (Experiment 1) or in both options (Experiment 2).
Various political institutions designed to control the government have been analyzed in the academic literature. However, an important institution has been neglected so far: independent auditing institutions with an extended mandate to audit the budget draft and individual policy proposals. We argue that such auditors improve transparency and provide essential information on the impact of policy proposals on common pool resources, which leads to less wasteful spending. We empirically analyze the impact of such auditors on fiscal policy at the Swiss local level. Auditors who can evaluate and criticize policy proposals ex ante to policy decisions, significantly reduce the general tax burden and public expenditures. The results are similar for different datasets and robust to various changes in the econometric specification.
Public Audit Offices are fundamental institutions to supervise government agents. Without accurate information principals would find it hard to make adequate decisions. Since agents face strong incentives to misreport, competent audits of financial information are crucial. This paper is the first attempt to study the relationship between auditor expertise and fiscal performance. More competent auditors are more effective supervisors; they reduce the leeway of agents to misreport and improve fiscal outcomes. The empirical results support this hypothesis. I find that States requiring the auditor to hold a professional degree feature significantly higher credit ratings and lower expenditures and debts.
In this research, we examine the conditions under which outcomes bias judgments, and we provide insights on the processes underlying such bias effects. A series of three studies identified motivated reasoning as a major determinant of when outcomes would bias judgments. The processes underlying outcome bias effects also varied depending on the motivational goal. Accuracy goals minimized outcome bias based on objective elaboration. Defense goals enhanced outcome bias by promoting selective processing of the outcome when it was preference consistent. Finally, impression goals increased the perceived diagnosticity of outcomes and biased the subsequent systematic processing resulting in outcome-biased judgments. (c) 2005 by JOURNAL OF CONSUMER RESEARCH, Inc..
Objective. This research note compares the views of the federal government held by federal government workers, their family members, their close friends, and state and local government workers to the views held by other U.S. citizens. Methods. We analyze data from a 2000 survey of Washington, D.C. metropolitan-area residents. Results. Respondents employed at any level of government—not only federal but also state and local—trust the federal government more than respondents with no ties to government. Being the family member or friend of a federal government employee has no impact on trust in government. Conclusions. A confidence gap divides government employees from the rest of the public.
How agencies can better combat fraud in federal programs
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Germany agrees a fresh $146 billion stimulus plan to fight the economic impact of coronavirus, days after the EU's record-breaking proposal
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2020. 4 coronavirus stimulus packages. $2.4 trillion in funding. See what that means to the national debt
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Why people “don't trust the evidence”: Motivated reasoning and scientific beliefs
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The case for motivated reasoning
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