M.L. Roberts’s scientific contributions

Recent research has focused on audit firms' client portfolio management choices, assuming firms are motivated to reduce overall business risk consistent with Expected Utility Theory. However, Prospect Theory predicts individuals make risk seeking choices when faced with potential losses, perhaps including losing the revenue from terminating an existing client. This study examines the effect of individual audit Partners' risk preferences in the context of whether to retain or terminate a risky audit client. The results indicate individual Partners' risk attitudes have a significant effect on their decisions whether or not to retain a risky audit client. Implications for audit practice and future research are discussed.