Kathryn Kadous
Schaefer Chaired Professor of Accounting | Emory University, Goizueta Business School
Atlanta, GA, UNITED STATES
Kadous's research focuses on using psychology to improve investor and auditor decision making.
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Biography
Kathryn Kadous is the Schaefer Chaired Professor of Accounting at Emory University's Goizueta Business School. She served as Director of Graduate Studies and Associate Dean of the Goizueta PhD Programs from 2017-2023. Professor Kadous earned a PhD from the University of Illinois.
Her research considers judgment and decision-making issues in auditing and accounting. Her current research is focused primarily on using psychology theory to improve auditor and investor decision making and on methodological issues in experimental research.
Professor Kadous' research has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research, Organizational Behavior and Human Decision Processes, The Journal of Behavioral Finance, and Auditing: A Journal of Practice and Theory.
Professor Kadous has extensive editorial experience and currently serves as Senior (Managing) Editor of The Accounting Review. She has held several positions with the American Accounting Association, including President of the Auditing Section.
Education (3)
Creighton University: BSBA, Accounting 1986
summa cum laude
University of Illinois at Urbana-Champaign: MAS, Accountancy 1990
University of Illinois at Urbana-Champaign: PhD, Accountancy 1996
Areas of Expertise (5)
Auditor Judgment
Investor Judgment
Audits of Financial Statements
Financial Reporting
Cognitive Processing and Complex Judgments
Publications (3)
Are juries more likely to second-guess auditors under imprecise accounting standards?
Auditing: A Journal of Practice & Theory2016 U.S. auditors are concerned that less precise accounting standards will cause more second-guessing of their judgments and thus greater legal liability. We report the results of an experiment that tests the validity of this concern. We manipulate the aggressiveness of the client's reporting decision and the precision of the accounting guidance related to the reporting decision. When the client's reporting is conservative, we observe more second-guessing of auditor judgments under the imprecise standard than the precise standard. However, when the auditor allows aggressive client reporting, we observe less tendency toward second-guessing under the imprecise standard. Indeed, rather than being overly harsh, juries appear to be overly lenient when auditors allow aggressive accounting under an imprecise standard. Our results suggest a need for tools to help jurors evaluate auditor judgments under imprecise standards.
How insights from the “new” JDM research can improve auditor judgment: Fundamental research questions and methodological advice
Auditing: A Journal of Practice & Theory2015 We examine recent developments in judgment and decision-making (JDM) research to provide insight into how two big ideas in this area can be leveraged as overlapping frameworks to examine and improve auditor judgment. The ideas are (1) that human thinking and reasoning can be characterized by a dual-process model and (2) that conscious and nonconscious goals drive cognition. Despite that these ideas are well established in the broader JDM literature and have great promise for improving auditor judgment, we observe minimal use of them in the audit JDM literature. Thus, we briefly outline these ideas, and we develop fundamental, high-level research questions related to audit JDM research that are based on these ideas. Finally, we provide guidance for designing and evaluating experiments that effectively use these frameworks, whether in auditing or other rich decision-making contexts. The frameworks can help researchers improve audit quality by enhancing our understanding of auditors' judgment processes and the factors that influence them, by allowing for new ways of thinking about how to improve auditor judgment, and by suggesting new interventions for improving auditor judgment.
Auditor Mindsets and Audits of Complex Estimates
A Journal of Accounting Research2014 Auditors experience significant problems auditing complex accounting estimates, and this increasingly puts financial reporting quality at risk. Based on analyses of the specific errors that auditors commit, we propose that auditors need to be able to think more broadly and incorporate information from a variety of sources in order to improve audit quality for these important accounts. We experimentally demonstrate that a deliberative mindset intervention improves auditors’ ability to identify unreasonable estimates by improving their ability to identify and incorporate into their analyses contradictory information from diverse parts of the audit and improving their ability to think critically about the evidence. We perform additional analyses to demonstrate that our intervention improves auditor performance by causing them to think differently rather than simply to work harder. We demonstrate that critical thinking can improve the identification of unreasonable estimates and, in doing so, we provide new directions for addressing audit quality issues.
Research Spotlight
In the News (4)
CAQ awards five grants for audit research
Accounting Today online
2019-05-22
The CAQ has provided funding for 44 related projects over the last 11 years via its Research Advisory Board grant program. The RAB comprises members of academia and the auditing profession.
How Principles-Based Accounting Standards Impact Litigation
Law 360 online
2016-02-22
Principles-based standards may have a dampening effect on the litigation outcomes. When the client engages with aggressive accounting, the flexibility of principles-based standards works in favor of auditors.
Exploring the scholarly inquiry of Kathryn Kadous
emorybusiness.com online
2015-11-09
According to research from Kathryn Kadous, McIntyre term chair and professor of accounting at Goizueta, the accounting world has yet to deal with how auditors’ workflow and the unconscious biases that it produces impact their work. In a research paper titled “Auditor mindsets and audits of complex estimates,” Kadous and co-authors discovered that an unconscious bias—a lack of professional skepticism—inhibits auditors’ ability to spot problems in the financial statements. To sign off on financial statements of public companies, top auditors gather information from the company itself, from multiple auditors working under them, and from outside specialists hired by the company and the auditing firm. Auditors use this information to determine whether estimates in corporate financial statements are reasonable, yet their conclusions can be wrong if they fail to question the sources of this information or fail to notice inconsistencies across information. Kadous’s work centers on the psychological process of accounting and auditing work. “My research focuses on how auditors make judgments about the most complex accounts on financial statements—complex estimates,” she says. Estimates are required for important accounts on the financial statements, including investments and securities, goodwill, allowance for loan losses, intangibles, and more. “This part of the auditor’s job requires considerable judgment, and regulators and researchers, as well as auditors themselves, have been clear that auditors need help in this area,” she says.
Emily E. Griffith, Jacqueline S. Hammersley, and Kathryn Kadous to receive the 2019 Deloitte Foundation Wildman Medal Award
American Accounting Association online
2019-06-13
The American Accounting Association (AAA) would like to congratulate Emily E. Griffith, Jacqueline S. Hammersley, and Kathryn Kadous as the recipients of the 2019 Deloitte Foundation Wildman Medal Award for their paper, “Audits of Complex Estimates as Verification of Management Numbers: How Institutional Pressures Shape Practice,” published in the Fall 2015 issue of Contemporary Accounting Research. This AAA award, which is sponsored by the Deloitte Foundation, will be presented to Professors Griffith, Hammersley, and Kadous in the form of a medal and monetary prize at the Tuesday plenary on August 13, 2019 at the AAA Annual Meeting in San Francisco, CA.
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