Journal of Business Ethics

, Volume 156, Issue 2, pp 513–530 | Cite as

Can Social Norm Activation Improve Audit Quality? Evidence from an Experimental Audit Market

  • Allen D. Blay
  • Eric S. Gooden
  • Mark J. Mellon
  • Douglas E. StevensEmail author
Original Paper


We assert that audit quality can be improved to the extent that social norms for honesty and responsibility are activated in the auditor. To test this assertion, we use an experimental audit market setting found in the literature and manipulate factors expected to activate honesty and responsibility norms in the auditor. We find that auditor misreporting is reduced when the investor is another participant in the experiment rather than computer simulated, and thus, the interests of third-party investors are salient to the auditor. We also find that auditor misreporting is reduced when the auditor is required to sign-off on the audit report, but only when the investor is another participant in the experiment. Consistent with our underlying theory, we find that pre-experimental measures of sensitivity to honesty and responsibility norms help explain the effects of our manipulated variables. Finally, we find that these measures of social norm sensitivity are associated with the moral judgment that auditor misreporting is unethical. Our study helps explain previous anomalous findings in the literature and answers the call in Blay et al. (J Bus Ethics 2017. doi: 10.1007/s10551-016-3286-4) for empirical researchers to use social norm theory to develop stronger tests of moral reasoning in the market for auditing services.


Audit quality Social norm activation Moral reasoning Honesty Responsibility 



This paper has benefitted from the helpful comments of Alisa Brink, Kendall Bowlin, David Bryan, David Cooper, Mark Isaac, Terry Mason, Josette Pelzer, Kenny Reynolds, and workshop participants at the FSU Experimental Economics Research Group, the FSU Accounting Research Colloquium, the USF School of Accountancy Workshop, the 2012 AAA Annual meeting, the 2012 AAA Auditing Midyear Meeting, and the 2013 AAA Annual Ethics Research Symposium. The authors would especially like to thank Jeff Schatzberg and Brian Shapiro for sharing their experimental instructions so we could closely replicate the experimental audit market setting in Schatzberg et al. (2005). The experimental audit markets reported here were conducted at the experimental lab at FSU and funded by a research grant from the FSU Department of Accounting. Lastly, we would like to thank Philip Brookins for helping us program and administer the experimental sessions.


The experimental audit markets reported here were funded by the Department of Accounting at the academic institution where the experiments were conducted.

Compliance with Ethical Standards

Conflict of interest

Allen Blay declares that he has no conflict of interest. Eric Gooden declares that he has no conflict of interest. Mark Mellon declares that he has no conflict of interest. Douglas Stevens declares that he has no conflict of interest.


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Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  • Allen D. Blay
    • 1
  • Eric S. Gooden
    • 2
  • Mark J. Mellon
    • 3
  • Douglas E. Stevens
    • 4
    Email author
  1. 1.College of BusinessFlorida State UniversityTallahasseeUSA
  2. 2.College of Business and EconomicsBoise State UniversityBoiseUSA
  3. 3.Muma College of BusinessUniversity of South FloridaTampaUSA
  4. 4.Robinson College of BusinessGeorgia State UniversityAtlantaUSA

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