Managerial Auditing Journal

Male and female auditors' overconfidence

Kris Hardies Diane Breesch Joël Branson
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Auditors’
Male and female auditors’ overconfidence
overconfidence
Kris Hardies, Diane Breesch and Joël Branson
Faculty of Economic, Social and Political Sciences, Vrije Universiteit Brussel, 105
Brussels, Belgium and Solvay Business School, Brussels, Belgium
Received 21 January 2011
Abstract Revised 7 June 2011
Purpose – The purpose of this paper is to examine if there exists a gender difference in Accepted 6 July 2011
overconfidence within an auditor population. Studies outside the accounting domain have found that
men are more overconfident than women. It would be worthwhile to know if such a gender difference
in overconfidence also exists within the auditor population. Such a gender difference could have
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far-reaching consequences; among other things, it could explain why client firms with female audit
partners have significantly higher audit fees. Because of substantial self-selection and socialization it
could however be that female auditors are as overconfident as their male colleagues.
Design/methodology/approach – As is common in the psychological literature, calibration tests
were used to measure the degree of overconfidence of male and female auditors.
Findings – The results provide no evidence for a gender difference in overconfidence within a
population of auditors and warrant against generalizing findings from non-audit populations to auditors.
Research limitations/implications – Consistent with previous research, overconfidence was
treated as if it were a single construct. The different varieties of overconfidence may, however, not
simply be interchangeable. It may be the case that one measure of overconfidence would produce a sex
difference while the other would not.
Practical implications – This study contributes to the growing literature that examines the effects
of gender on audit judgment and decision making. An important implication is that the results clearly
warrant against generalizing findings from non-audit populations to auditors.
Originality/value – This is the first study to investigate if a gender difference in overconfidence
exists within an auditor population.
Keywords Overconfidence, Gender differences, Auditing, Auditors, Biases and heuristics
Paper type Research paper

1. Introduction
Overconfidence has been a hot topic in judgment and decision making research (Hardman,
2009). The overconfidence effect describes, among other things, the tendency of people to
believe that their judgment is more accurate than it really is. As a result, overconfidence
can create a mismatch between one’s confidence in one’s own judgments and the real
accuracy of these judgments. The principal fashion in which overconfidence has been
established is through so-called calibration tests (Lichtenstein et al., 1982; Teigen and
Jørgensen, 2005). Calibration is a criterion for evaluation of probability judgments.
Overconfident individuals have been found to miscalibrate by giving too narrow
confidence intervals (Beckmann and Menkhoff, 2008; van de Venter and Michayluk, 2008).
When individuals are asked to construct, for example, 90 percent confidence intervals
for currently (or soon) knowable magnitudes (e.g. Martin Luther King’s age at death, Managerial Auditing Journal
Vol. 27 No. 1, 2012
pp. 105-118
q Emerald Group Publishing Limited
This paper has benefited from the comments of the participants of the 33rd Annual Congress of 0268-6902
the European Accounting Association (2010). DOI 10.1108/02686901211186126
 MAJ or the exchange rate of the US$), far fewer than 90 percent of these intervals bracket the
27,1 true answer. If people were well-calibrated, 90 percent of their 90 percent confidence
intervals would contain the true value. However, true values typically fall within such
intervals between 30 and 60 percent of the time, indicating extreme overconfidence
(Mckenzie et al., 2008; Teigen and Jørgensen, 2005). Unless under very stringent conditions
(namely, facing similar problems every day, making explicitly probabilistic predictions
106 and obtaining swift and precise feedback on outcomes), overconfidence should be
expected both for experts and for non-experts (Kahneman and Riepe, 1998).
Auditing judgment and decision-making research has always had much interest in the
extent to which auditor judgments are biased because of the use of heuristics (i.e. rules of
thumb) (Trotman, 1998; Solomon and Trotman, 2003). Few studies have, however,
addressed the issue of auditor overconfidence, although auditor overconfidence may cause
audits to be ineffective, and could lead to legal problems, inappropriate staffing, inefficient
use of technology, and misallocation of audit resources (Owhoso and Weickgenannt, 2009).
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Recent research also suggests that auditors are no less overconfident than laymen (Koch
and Wüstemann, 2009).
In this paper, we examine whether there exists a gender difference in overconfidence
within an auditor population. Gender differences in overconfidence have been reported
by many researchers from outside the domains of auditing and accounting. While
research into this topic is clearly not yet conclusive, most researchers have reported
findings that confirm the folk-belief that men are more overconfident than women.
Although many will interpret this as supportive evidence for the assumption that male
auditors are more overconfident than female auditors, one cannot safely assume that this
is indeed the case. Findings from research conducted on males and females from outside
the world of accounting cannot safely be assumed to apply for auditors, since auditors
are not a random sample of males and females but a well-selected subpopulation
(Hardies et al., 2010b). Gender differences that are present at the level of the general
population can be eliminated within a professional subpopulation, such as auditors,
because of self-selection (Kumar, 2010; Nekby et al., 2008) and/or socialization
(Gomez-Mejia, 1983; Smith and Rogers, 2000). Even if women, on average, are less
overconfident than men, there might thus be environments in which the selection of
women who participate is likely to be similar in terms of overconfidence compared to
their male colleagues (Nekby et al., 2008).
To the best of our knowledge, so far no study has investigated if a gender difference in
overconfidence exists within an auditor population. Examining whether overconfidence
differentially affects the judgments of male and female auditors is, however,
an important issue because audit overconfidence may impair the effectiveness of the
audit engagement (Owhoso and Weickgenannt, 2009). After all, the audit is permeated
by professional judgment. For example, most of the auditor’s work in forming the audit
opinion consists of obtaining and evaluating evidential matter concerning the assertions
in the financial statements. The measure of the validity of such evidence for audit
purposes lies in the judgment of the auditor (AICPA, 1980). Also the assessment of
auditor quality relies heavily on judgment (Han et al., 2011). Furthermore,
overconfidence could be an explanation for the recently reported association between
the sex of the audit engagement partner and the size of the audit fee, i.e. client firms with
female audit partners have significantly higher audit fees (Hardies et al., 2010a; Ittonen
and Peni, 2009)[1]. Finally, audit firms devote significant resources to training programs
 designed to impact audit knowledge which can improve the subjective judgment Auditors’
accuracy (Beck et al., 1985). If a gender difference in auditor overconfidence would exist, overconfidence
training directed specifically at improving auditor calibration of either men or women
would seem warranted. Although overconfidence seems to be pervasive, such training
could focus on providing feedback in order to reduce overconfidence (Arkes et al., 1988)
or encourage auditors to formulate counter-arguments whenever exercising judgment
(Vreugdenhil, 1993). 107
The remainder of this paper proceeds as follows. The next section describes the
importance of overconfidence in auditing and reviews previous literature on auditor
overconfidence. Section 3 reviews research on gender differences in overconfidence.
Section 4 describes the research method and presents the results. The final section presents
conclusions, limitations and suggestions for future research.
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2. Auditor overconfidence
Miscalibration has been linked to compromised effectiveness and efficiency of the audit.
It may be an indication that an inappropriate amount of audit evidence (i.e. too little)
is being collected (Mladenovic and Simnett, 1994). Pincus (1991, p. 39) pointed out to the
harmful consequences of overconfidence, it may prevent auditors from:
.
searching for additional evidence that would lead to different decisions;
.
taking into account disconfirming evidence; and
.
being responsive to feedback.

Altogether, it is suggested that overconfidence may cause audits to be ineffective

(Messier et al., 2008). The importance of auditor overconfidence has recently been
outlined very clearly by Owhoso and Weickgenannt (2009, p. 17):
[It] could lead the auditor to engage in risky behaviours and hence conduct ineffective audits by
overlooking the obvious [e.g., by failing to properly gauge the effectiveness of a client’s systems
and procedures, believing that he or she has the capacity to discover whatever weaknesses the
client may have] [. . .] The outcome of such overconfident decisions may take the form of
substandard audits and the misallocation of audit resources which could lead to legal
problems, inappropriate staffing, inefficient use of technology, and misallocation of audit
resources.
While the widely cited review of Smith and Kida (1991, p. 485) concluded that auditors
make less use of heuristics and are less prone to biases, recent studies not included in the
review of Smith and Kida have, however, shown that auditors are more often prone to
biases than was previously thought. Hence, the review of Koch and Wüstemann (2009)
suggested that auditors generally make as much use of heuristics as laymen, and
consequently, are also prone to biases. Furthermore, there are few signs that experts
produce more realistic confidence intervals than novices (Juslin et al., 2007, p. 681).
Auditing studies have, however, reported mixed results regarding the calibration
of auditors. Some studies reported auditors to be overconfident (Chung and Monroe,
2000; Harding et al., 2005; Kent and Weber, 1998), but others reported auditors to be
underconfident (Dilla et al., 1991; Mladenovic and Simnett, 1994; Tomassini et al., 1982).
That no general conclusion regarding auditors’ calibration can be drawn from
the auditing literature may be due to the fact that the level of overconfidence depends
on the domain and the participant group (Klayman et al., 1999). Previous research
 MAJ (Moore and Cain, 2007) has also revealed the so-called hard-easy effect. Overconfidence
27,1 is profound for hard tasks, but on easy tasks people tend to be rather underconfident
than overconfident. At least in certain circumstances, auditors appear to be bad judges
of ability. Auditors have been found to be overconfident regarding their own technical
knowledge (Kennedy and Peecher, 1997; Owhoso and Weickgenannt, 2009) as well as
regarding that of their subordinates (Kennedy and Peecher, 1997; Messier et al., 2008).
108
3. Gender differences in overconfidence
3.1 The general population
A number of studies have documented a gender difference in overconfidence, with men
being more overconfident than women in a wide variety of domains. Unprovoked
attacks and wars are more often initiated by men than by women because men are more
overconfident about their expectations of success in conflict (Johnson et al., 2006). Men
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are also more overconfident than women in a wide variety of domains related to
mathematics, science, and technology (Niederle and Vesterlund, 2007; O’Laughlin and
Brubaker, 1998; Pajares and Miller, 1994). The picture is less clear with respect to
overconfidence in financial matters[2]. On the one hand, the gender difference in
overconfidence in financial areas appears to be quite robust. It has, for example, been
shown that women are substantially less confident than men in their investment
decisions (Estes and Hosseini, 1988), and it has been suggested that men trade more than
women in financial markets because of overconfidence (Barber and Odean, 2001). On the
other hand, Beckmann and Menkhoff (2008, p. 365) noted that there exists “some doubt
as to whether male overconfidence is robust in financial affairs” and based on their
empirical research they rejected the view that women are less overconfident than men
(at least for the case of fund managers). Again, this stresses the fact that overconfidence
is task and domain specific (Klayman et al., 1999). Jonsson and Allwood (2003) noted
that, folk-beliefs notwithstanding, results from previous research are mixed and have so
far not been able to resolve this issue.

3.2 Auditor populations

As discussed above, men have been found to be more overconfident than women in a
variety of domains. It can, however, not safely be assumed that findings from research
conducted on men and women from outside the world of accounting apply to auditors
since auditors are not a random sample of males and females but a well-selected
subpopulation (Hardies et al., 2010b). Even if women, on average, are less overconfident
than men, there might be (male-dominated) environments in which the selection
of women who participate is likely to be similar in terms of overconfidence compared to
their male colleagues (Nekby et al., 2008). In fact, although psychological theories are
assumed to be universal, to make inferences about the human mind most studies in
the behavioural sciences recruit participants from undergraduate psychology
classes (Norenzayan and Heine, 2005). As Henrich et al. (2010) emphasize in a recent
critical review on the use of such narrow samples, this subpopulation may be one of the
worst subpopulations one could study to make claims about human psychology and
behavior – “it is not immediately apparent in which domains undergraduates or
college-educated Americans differ in various psychological measures from those
who are not currently students, or who were never college-educated” (Henrich et al.,
2010, p. 78).
 Given auditor’s extensive training in forming objective and unbiased judgments, Auditors’
normatively, one might expect that they would exhibit similar audit judgments. overconfidence
Both within and outside the accounting literature, it has been acknowledged that
self-selection (Kumar, 2010; Nekby et al., 2008) and socialization (Gomez-Mejia, 1983;
Smith and Rogers, 2000) have the possibility to erase sex differences within a
professional subpopulation. Smith and Rogers (2000, p. 76) noted in this regard that
“occupational socialization theory illustrates that differences tend to disappear as 109
employees are socialized within the work environment, the same may be said for those
working in the accounting profession.” The combination of self-selection with the
vigorous socialization of accounting firms may make women as overconfident as men
when working in the audit domain. Nothing guarantees however that this indeed will be
the case. Gender differences that are present in the general population can continue to
be present in professional subpopulations, such as auditors. Gold et al. (2009),
for example, found female auditors to be more risk-averse than male auditors, no less
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than the average woman is more risk-averse than the average man (Byrnes et al., 1999).
As the above discussion illustrates, a priori there is no reason to expect that it is
more likely that the gender difference in overconfidence that is present in the general
population will persist into the audit profession as it is to assume that there is no such
difference due to self-selection and professional socialization. In order to explore this
issue empirically, we therefore formulate the following research question:
RQ1. Do female and male auditors differ in their degree of overconfidence?

4. Survey design
4.1 Task choice
Moore and Healy (2008) have argued that the different varieties of overconfidence are not
simply interchangeable (Grieco and Hogarth, 2009; Hilton et al., 2011). The term
overconfidence is in fact used throughout literature in reference to three related but
distinct phenomena. First, overconfidence has been used to refer to peoples’ tendency to
overestimate their ability to do something (e.g. winning a war). Second, overconfidence
has been used to refer to situations wherein people rate themselves better than others
(e.g. thinking that your driving skills are above the median)[3]. Third, also the tendency
of people to believe that their judgment is more accurate than it really is (e.g. providing
too narrow confidence intervals for forecasts of uncertain future events), has been seen
as an illustration of overconfidence. In this study, we focus upon the latter form of
overconfidence for several reasons. First, it is the most robust type of overconfidence
(Haran et al., 2010). Second, interval production tasks have been shown to possess
test-retest and cross-domain consistency, thus being a reliable and valid measure to
assess overconfidence (Glaser et al., 2010; Hilton et al., 2011). Third, the focus in auditing
research has been on this type of overconfidence (Koch and Wüstemann, 2009) –
because it involves forecasts of uncertain future events, it is arguably the most relevant
type of overconfidence for auditing. According to Kent and Weber (1998, p. 120):
[. . .] a major task that auditors undertake in formulating their audit opinion is to estimate the
dollar error that might exist in accounts in light of their evaluation of internal control
strengths and weaknesses.
If auditors believe that their judgment is more accurate than it really is, audit efficiency
will be negatively affected (Beck et al., 1985).
 MAJ The tasks we use to examine if female and male auditors differ in their degree
27,1 of overconfidence are non-auditing tasks[4]. This choice is justified for a number of
reasons. The main advantage of using non-auditing tasks is that our results cannot solely
be ascribed to the specificities of our research instrument. Previous studies using these
tasks have documented the existence of a gender difference in overconfidence in the
general population as well as in specialized populations (e.g. lawyers, professional traders)
110 (Malsch, 1990; Oberlecher and Osler, 2011; Soll and Klayman, 2004)[5]. Moreover, these
measurements have been shown to be predictive of economic behaviour (Biais et al., 2005;
Deaves et al., 2009). The problem with employing an auditing task would be that there
would be no control condition, making it difficult to know if the results would be driven by
the specificities of the population (i.e. male and female auditors being somehow inherently
different to non-auditors), or by the specificities of the task (i.e. inducing gender-bias
somehow). From the study of Mladenovic and Simnett (1994), it also appears that auditing
tasks are not inherently different to non-auditing tasks, but auditors are somehow
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inherently different to non-auditors, reducing the need to use an auditing task. Moreover,
given that miscalibration scores are consistent across tasks and domains (Jonsson and
Allwood, 2003; Glaser et al., 2010), it seems reasonable to assume that our results would
generalize to a context where auditors are working on an auditing task.

4.2 Methodology and hypotheses

To examine our RQ1, we conducted two experiments[6]. In both experiments,
participants were asked to construct a 90 percent confidence interval for currently
(or soon) knowable magnitudes. The purpose of these calibration questions was
to compare respondents’ predictions to the actual ex post outcome (experiment 1) or
the actual value (experiment 2). Given that respondents were expressly instructed to
write down a low and a high value such that they were 90 percent confident that the true
value fell (or would fall) within the resulting interval, we counted how often these
intervals contained the true value. This is referred to as so-called HIT RATE. This is the
typical measure used to evaluate interval estimates (Klayman et al., 1999;
Lichtenstein et al., 1982; Soll and Klayman, 2004). If individuals would be well
calibrated, only 10 percent of final values should fall outside the estimated 90 percent
intervals. In both experiments, we tested the following hypothesis:
H1. The HIT RATES of female and male auditors will not differ.
HIT RATE is, however, not all that matters when people evaluate intervals. Narrow
intervals are often considered to be superior because they are much more informative
(Yaniv and Foster, 1997). Therefore, we also computed INTERVAL SIZE, which equaled
(high value – low value), as a measure of informativeness (i.e. narrower intervals are
more informative) (Mckenzie et al., 2008). Wider intervals will generally, ceteris paribus,
increase HIT RATE.
Finally, we also computed ERROR, which equaled jt 2 mj, where t is the true value
and m is the midpoint of a given interval. Holding INTERVAL SIZE constant,
reducing ERROR will generally increase HIT RATE.
If a gender difference in overconfidence (HIT RATE) within the population of auditors
is found, this may be caused by differences in INTERVAL SIZE or by differences
in ERROR. Individuals with lower ERROR are presumably more knowledgeable,
individuals with narrower INTERVAL SIZE are presumably more confident
 in their judgment. We do not expect male auditors to be more knowledgeable than female Auditors’
auditors, or vice versa. This reasoning leads to the following hypotheses:
overconfidence
H2a. INTERVAL SIZES will be as narrow for male as for female auditors.
H2b. ERROR will be the same for male and female auditors.
5. Results 111
5.1 Experiment 1
5.1.1 Participants and procedure. Participants were 122 Belgian auditors
(75 percent males and mean age of 42 years). An internet-based survey was used to
collect data in November 2008. The participants read that they would be required to
indicate a judgment in the form of a fixed prediction interval for a future unknown
quantity:
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Estimate the evolution of the exchange rate of the US$. I am 90% certain that on 31/12/2008
the exchange rate of e1 will be minimal $[. . .] and maximal $[. . .]
5.1.2 Dependent measures and predictions. Given that respondents were expressly
instructed to forecast index levels far enough apart to be 90 percent certain that the actual
index level on 31 December 2008 would lie somewhere in between their interval estimates,
we expected that 90 percent of forecasters should be correct with their prediction interval.
HIT RATE, INTERVAL SIZE and ERROR were computed as described above.
5.1.3 Results. According to the European Central Bank the actual exchange rate of
the euro on 31 December 2008 was US$ 1.3917. Most auditors appeared to be relatively
well calibrated; their forecasts were set broad enough to include this value 68.1 percent
(HIT RATE) of the time (Table I).
Our data fail to reject H1; male auditors did not appear to be more overconfident than
female auditors ( p ¼ 0.426). The mean exchange rate prediction was 1.2683 (SD ¼ 0.1563)
for male auditors and 1.2954 (SD ¼ 0.1767) for female auditors ( p ¼ 0.576). Also H2a
cannot be rejected; male auditors did not provide more informative intervals than female
auditors. The mean result for INTERVAL SIZE was 0.2833 (SD ¼ 0.2055) for male
auditors compared to 0.2879 (SD ¼ 0.1693) for female auditors ( p ¼ 0.940).
In accordance with H3a, ERROR was 0.1394 (SD ¼ 0.1419) for male auditors and
0.1508 (SD ¼ 0.1293) for female auditors ( p ¼ 0.785). Some previous studies have
reported an age-related increase in overconfidence (Hansson et al., 2008; Wu et al.,
2008). Given the significant age difference in our sample ( p ¼ 0.000), with males being
on average five years older, we reran our analyses controlling for sex-age interaction.
Our results remained, however, completely unaffected by this[7].
5.2 Experiment 2
5.2.1 Participants and procedure. Participants were 597 Dutch auditors (86 percent
males and mean age of 46 years). An internet-based survey was used to collect data

Male auditors (n ¼ 92) Female auditors (n ¼ 30) Difference (M – F)

HIT RATE 68.5% 67.0% 1.5% ( p ¼ 0.426)

INTERVAL SIZE 0.2833 0.2879 2 0.0046 ( p ¼ 0.940) Table I.
ERROR 0.1394 0.1508 2 0.0114 ( p ¼ 0.785) Results experiment 1
 MAJ in March 2009. The participants read that they would be presented with ten questions
27,1 (the Appendix) asking about values that they would probably be uncertain about. They
were to write down a low and a high value such that they were 90 percent confident that
the true value fell within the resulting interval. The question used in experiment 1 was
provided as an example.
5.2.2 Dependent measures and predictions. HIT RATE was determined for each
112 participant for a set of questions by dividing the number of times the participant’s interval
contained the true value by the number of questions. If the true value equaled an interval
boundary, it was counted as a hit. If individuals would be well calibrated, only 10 percent
of final values (i.e. one out of ten questions) should fall outside the estimated 90 percent
intervals[8]. INTERVAL SIZE and ERROR were computed as described above.
5.2.3 Results. The overall HIT RATE was 31.9 percent (SD ¼ 2.5), replicating
previous findings of extreme overconfidence. HIT RATE was slightly higher for female
auditors (mean ¼ 34.4 percent, SD ¼ 2.8) than for male auditors (mean ¼ 31.5 percent,
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SD ¼ 2.5), but the difference was not statistically significant ( p ¼ 0.365). We also note
that HIT RATE is much lower than in experiment 1, confirming that the magnitude of
the overconfidence effect is task dependent (Table II).
H2a cannot be rejected based upon our data. INTERVAL SIZE was computed for all
ten questions and indicated that male auditors provided no more informative intervals
than female auditors ( p-values ranging from 0.249 to 0.910). H2b was not refuted by
our data; ERROR was the same for male as for female auditors ( p-values ranging from
0.363 to 0.846). We controlled for sex-age interaction since the males in our sample were
again significantly ( p ¼ 0.000) older than the females (nine years on average), but
again our results were unaffected by this[9].

6. Conclusions and limitations

Researchers (Owhoso and Weickgenannt, 2009), as well as regulators (AICPA, 2002) have
acknowledged the potential threat of auditor overconfidence on the effectiveness of the
audit engagement. Research on auditor overconfidence has, however, been relatively
scarce and from the auditing literature no clear picture comes forward. Given the audit
profession’s move toward a more balanced sex ratio (e.g. nowadays females make up
more than 50 percent of the entry-level talent pool (AICPA, 2008)) and the gender
difference in overconfidence found in other domains, it is surprising that so far no study in
auditing or accounting has addressed the topic of gender differences in overconfidence.
It would, however, be worthwhile to know if such a gender difference in overconfidence
exists within the auditor population, as such a gender difference could have far-reaching
consequences. Among other things, it could cause audit fees to be related with the gender

Male auditors (n ¼ 513) Female auditors (n ¼ 84) Difference (M – F)

HIT RATE 31.5% 34.4% 2.9% (p ¼ 0.365)

INTERVAL SIZE (p ¼ 0.249)
ERROR (p ¼ 0.363)
Notes: This table does not report specific values for INTERVAL SIZE and ERROR since these values
Table II. are not very informative (and averaging them is meaningless); for both these variables, we report the
Results experiment 2 lowest p-values observed for any specific question
 of the audit engagement partner (Ittonen and Peni, 2009). Contrary to what one might Auditors’
expect, our results provide no evidence for a gender difference in overconfidence within overconfidence
a population of auditors and warrant against generalizing findings from non-audit
populations to auditors – and, more in general, from undergraduates to other
subpopulations (Henrich et al., 2010). The results of Ittonen and Peni (2009) and
Hardies et al. (2010a), showing that client firms with female audit partners have
significantly higher audit fees than client firms with male audit partners, are beyond 113
doubt interesting and intriguing[10]. It should, however, not be simply assumed that this
is caused by a gender difference in overconfidence (or a gender difference in
risk-aversion, or any other gender difference for that matter), even not if there is extant
and overwhelming evidence from psychological and management research.
Aside from the usual threats to validity associated with experimental research, the
results of this study are subject to several specific limitations that might have undermined
our results and that open opportunities for future research to investigate gender differences
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in overconfidence within accounting and auditing settings. First, while the results of this
study provide no evidence for a difference between male and female auditors in terms of
overconfidence, this study did not try to capture all facets of overconfidence. As we have
discussed above, there are good reasons to focus on miscalibration, but other researchers
might want to focus on other types of overconfidence nevertheless. Second, although we
used data collected from real auditors in both our experiments, the employed tasks were
not auditing tasks. Amongst other things, this has the advantage that our results cannot
solely be ascribed to the specificities of our research instrument. Nevertheless, participants
may have perceived our experimental tasks to be less “masculine” than they perceive real
world auditing tasks – if there are gender differences in overconfidence, they are to be
more typical in domains perceived to be “masculine” (Beyer, 2002; Beyer and Bowden,
1997; Deaux and Emswiller, 1974; Lundeberg et al., 1994). Thus, in the real world of
auditing gender differences in overconfidence may be present because stereotypical
activation may be far greater in the real world than it was in our experimental setting – it is
well documented that the activation of gender-based stereotypes can result in stereotyped
task performances and preferences (Spencer et al., 1999).
Future studies may be needed to investigate whether the results of our study might be
different if overconfidence is examined in different contexts (i.e. using other measures or
tasks). Despite these limitations, this study contributes to the literature in three main
ways. First, it confirms that auditors (gender unspecified) are overconfident in some
tasks and that the magnitude of the effect is task dependent. Second, it contributes to
the growing literature that examines the effects of gender on audit judgment and
decision-making (Gold et al., 2009). Finally, it warrants against generalizing findings
from non-audit populations to auditors.

Notes
1. Less vis-à-vis more overconfident audit engagement partners will demand more audit effort
and/or charge a higher risk premium (thus increasing audit fees) – female auditors are
presumed to be less overconfident than male auditors.
2. Overconfidence is an important issue in financial decision making (it drives, for example,
trading (Biais et al., 2005), and excess entry into markets by entrepreneurs (Camerer and
Lovallo, 1999)) and has been examined quite extensively.
 MAJ 3. Thinking that you are better at something than others is not an illustration of overconfidence
per se. It is, however, impossible for a majority to be above (or below) the median, thus, the
27,1 fact that a majority of people rates themselves above the median (e.g. for driving skills
(Svenson, 1981)) illustrates overconfidence in the population.
4. These tasks have been widely used in the psychological literature. It is also based upon this
literature that accounting researchers have argued in favor of the existence of a sex difference
114 in overconfidence (Barua et al., 2010; Hyatt and Taylor, 2008; Ittonen and Peni, 2009).
5. As an extra control, we also administered this task to 119 graduate accounting students
(60.5 percent males). This replicated previous findings of males being more overconfident
than females ( p ¼ 0.012).
6. Given the rather limited number of (especially female) participants in our first experiment,
we were suspicious about the reliability of our results. We therefore conducted a second
experiment with a larger sample to see if our results would be replicated.
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7. The correlation between HIT RATE and participants’ age was 2 0.201 ( p ¼ 0.005). As an
alternative control, we dropped the 20 oldest men from our sample, thereby leveling the
average age of male and female auditors (mean age of 39 years; p ¼ 238) – we thank an
anonymous reviewer for this suggestion. Our results were again not affected.
8. Participants could have obtained such a result by giving an impossible answer to one of the
questions and near-infinite ranges on the other nine questions. We have, however, found no
evidence of this.
9. The correlation between HIT RATE and participants’ age was 20.124 ( p ¼ 0.006). Again,
as an alternative control, we also dropped the 100 oldest men from our sample in order to
level the average age of male and female auditors (mean age of 40 years; p ¼ 173). Our results
were again not affected.
10. For one thing, they appear to be inconsistent with a growing literature that suggests that
women have a tendency to charge lower prices to individual customers (Cron et al., 2009).

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Appendix
Analogous to the example, give for each of the ten following questions a minimum and a maximum
value so that you are 90 percent certain that the correct answer is within this range. You have to
expect that you answer 10 percent of the questions (i.e. one question) wrong. The questions are not
aimed at misguiding you and should (in cases of confusion) be interpreted in the most logical manner:
(1) What was Martin Luther King Jr’s age at death?
(2) In what year was J.S. Bach born?
(3) How many countries belong to OPEC?
(4) How many books are there in the Old Testament?
(5) How many companies went bankrupt in 2008, in Belgium?
(6) How many independent, sovereign countries were there at the end of 2008?
(7) What is the gestation of an Asian elephant, in days?
(8) What is the diameter of the moon, in kilometres?
(9) What is the air distance from London to Tokyo, in kilometres?
(10) What is the deepest known point in the ocean, in metres?

Source: Russo and Shoemaker (1989)

Corresponding author
Kris Hardies can be contacted at: kris.hardies@vub.ac.be

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