Liability Judgments Research Articles

Can artificial intelligence reduce the effect of independence conflicts on audit firm liability?

AbstractIn this study, we examine whether the use of artificial intelligence (AI) can reduce the effect of independence conflicts on audit firm liability. In two experiments, we manipulate (1) whether procedures are performed by a human auditor or with AI and (2) whether the audit firm was careful in maintaining the appearance of independence from the audit client. Results of both experiments indicate that the use of AI significantly reduces the impact of the appearance of independence conflicts on jurors' judgments of audit firm liability. When concerns relating to the appearance of independence conflicts are present, the use of AI helps maintain the perceived objectivity of the auditor, which results in jurors maintaining higher overall trust in the audit process. Our study contributes to literature on determinants of auditor litigation risk and how technological change that is likely to grow in prominence might affect audit firm liability.

Measuring novice auditor orientation and its impact on judgment

PurposeThe purpose of this study is to construct and test a new measure of auditor orientation using two audit quality-related tasks.Design/methodology/approachThe sample consists of 66 Dutch and US graduate auditing students. Participants complete two tasks: one involving a lease classification and another, supplemental experiment involving a contingent liability judgment. The purpose is to construct a new measure for rules-based/ principles-based orientation. Rigorous, psychometric testing confirms that parts of tolerance for ambiguity (TOA) and need for cognition (NFC), together, form a new construct the authors identify as auditor orientation. The authors next conduct a main and supplemental experiment with novice auditor participants from both the USA and the Netherlands.FindingsThe authors begin with rigorous, psychometric testing using participants from the USA and the Netherlands. The resulting 10-item scale combines parts of TOA and NFC to reflect auditor orientation. The common themes across scale items are high (low) adaptability to complexity and a substance-over-form (form-over-substance) preference for principles-oriented (PO) (rules-oriented [RO]) auditors. Conducting two experiments, results from two distinct tasks confirm our research question; novice auditors classified as RO (PO) are more (less) likely to recommend a more aggressive/client-favorable disclosure judgment.Originality/valueAuditor orientation (i.e. rules or principles) has a significant impact on the application of rules-based or principles-based standards. How the standards are applied, therefore, influences auditor decision-making and thus audit quality. However, there is a paucity of auditor orientation research to date, including a validated measure. The study contributes a new measure for future research in the related accounting standards and audit quality literatures, while also identifying a potentially important construct in auditor training.

Some problems raised by the theory of the equivalence of conditions and the theory of adequate causation in civil liability

In this work we intend to highlight some questionings regarding the application of the theory of the equivalence of the conditions as well as the theory of adequate causation in the resolution of complex causal issues. Said complex issues involve factual characteristics that do not allow determining harmful effects for later qualifying them as damages (at least from a sensible sense of justice). Regarding the first theory, it is stated that since there are damages whose origin can only be attributed to omissions, the causal approach of mental suppression loses relevance; The same thing happens in contexts of alternative or hypothetical causation, in which it is essential to resort to statutory criteria to respond to these complex issues. Regarding the latter theory, it is argued that it reveals complexities, mainly its connection with foreseeability, which can be seen both in the context of the an debeatur and of quantum respondentur, which are part of the stages of any liability judgment. This occurs when determining the scope of those who are deemed liable. In this latter case the distinction between adequate causation and negligence is not really appreciated; the same occurs in the determination of damages; if this latter theory were followed, the principle of comprehensive damage provided for by our legal system would be violated, at least for non-contractual liability, in accordance with the provisions of article 2329 of the Civil Code (CC).

Auditor interventions that reduce auditor liability judgments

Prior research documents jurors do not always respond consistently, or favorably, to auditors' quality-intended efforts. Counterintuitively, in some instances, doing more has led to greater liability, not less (Reffett, 2010). We hypothesize (and find) that proactive engagement of the corporate audit committee will reduce counterfactual thinking, and the proactive use of a forensic specialist at the audit planning stage will reduce negative intention-attributions. We further hypothesize these interventions, in turn, will reduce negative affect toward the auditor and negligence judgments. Our research leverages counterfactual thinking, attribution, and blame theories, and the use of affect as information. Additionally, we build on recent research that finds proactive preventive actions and the presence of a strong, active audit committee can reduce auditor liability judgments (Alderman & Jollineau, 2020; Frank, Grenier, & Pyzoha, 2021). Unlike Reffett (2010), we find that auditor's incremental efforts can reduce, rather than increase, negligence judgments. Our scenarios differ from those of Reffett in the timing and nature of auditor interventions and the root causes of the audit failure. We contribute to ongoing research examining the effects of auditor choices on jurors' judgments.

Raster plots machine learning to predict the seizure liability of drugs and to identify drugs

In vitro microelectrode array (MEA) assessment using human induced pluripotent stem cell (iPSC)-derived neurons holds promise as a method of seizure and toxicity evaluation. However, there are still issues surrounding the analysis methods used to predict seizure and toxicity liability as well as drug mechanisms of action. In the present study, we developed an artificial intelligence (AI) capable of predicting the seizure liability of drugs and identifying drugs using deep learning based on raster plots of neural network activity. The seizure liability prediction AI had a prediction accuracy of 98.4% for the drugs used to train it, classifying them correctly based on their responses as either seizure-causing compounds or seizure-free compounds. The AI also made concentration-dependent judgments of the seizure liability of drugs that it was not trained on. In addition, the drug identification AI implemented using the leave-one-sample-out scheme could distinguish among 13 seizure-causing compounds as well as seizure-free compound responses, with a mean accuracy of 99.9 ± 0.1% for all drugs. These AI prediction models are able to identify seizure liability concentration-dependence, rank the level of seizure liability based on the seizure liability probability, and identify the mechanism of the action of compounds. This holds promise for the future of in vitro MEA assessment as a powerful, high-accuracy new seizure liability prediction method.

With theater, you have to be ready for anything: university response, expert testimony, and sample influence jurors’ decisions and counterfactual endorsement in a crime control theater case

ABSTRACT Crime control theater (CCT) policies are adopted in response to public outcry for action and are widely accepted, but ineffective at reducing crime (e.g. Sex Offender Registration and Notification; SORN). The study examined the influence of a university’s SORN policy adherence (no/minimum/above & beyond), expert testimony on policy effectiveness (absent/present), and sample (student/community) on jurors’ decisions, counterfactual endorsement, and anger. Participants (N = 674) read a vignette in which parents sued a university for the wrongful death of their daughter by a registered sex offender. Greater counterfactual thinking (if the university had done more than different outcome) and likelihood of a liable verdict were expected when expert testimony was absent (greater belief SORN policy effectiveness), or university failed to adhere to the policy. University response and expert testimony had the expected effects on liability measures and counterfactual endorsement. Additionally, counterfactual endorsement was influenced by sample (greater community endorsement). Also, the community sample was less calibrated and more punitive in their decisions – increased liability judgments and damages. Counterfactual endorsement and/or anger mediated the effects of university response, expert testimony, and sample on liability measures and damages. These findings suggest that anger and counterfactual thinking are important mechanisms driving public support for CCT policies.

Illegal use of fertilized eggs outside the womb (A comparative study)

Illegal use of fertilized eggs outside the womb (A comparative study)

RESPONSIBILITY OF PERSONALITY AS A FACTOR OF SUCCESSFUL IMPLEMENTATION OF ACTIVITY

The publication examines the role of responsibility in the successful implementation of activity. Responsibility is analyzed from the perspective of a systemic paradigm in the context of a dispositional concept of personality and individuality characteristics of A.I. Krupnov. A certain relationship between the level of manifestation of responsibility and effectiveness of activity is shown. The study involved three groups of respondents performing different types of activities. Students revealed the level of formation of personal responsibility and success in educational activities. The same was assessed among graduate students in carrying out research activities and court staff in carrying out their professional duties. In the study of responsibility as personality traits an expert assessment and a liability judgment test developed by A.I. Krupnov were used. As experts for students acted instructors, for graduate students - supervisors and instructors, for court staff - administrative staff and colleagues. The experts assessed in questionnaires on a five-point scale for the manifestation of responsibility in different situations were related to educational, research and professional activities. The liability judgment test is a standardized technique that meets the requirements of reliability and validity. To determine the success index in the performance of respondents' activities, an expert assessment, content analysis and analysis of the products of activities were also used. When processing empirical material, quantitative analysis was applied using methods of mathematical and statistical data processing and qualitative analysis. The results showed that in all three groups of respondents there is a correlation between the level of development of responsibility and the quality of performance of activity. The higher the level of manifestation of responsibility, the greater the success recorded in educational activities among students, the more qualitatively the scientific research is carried out among graduate students and the higher indicators in professional activity are revealed among court employees. At the same time, respondents with a high level of responsibility and success in their activity recorded a higher level of anxiety. This fact indicates that these respondents may be at risk for the development of emotional burnout. This work can be the basis for conducting deeper longitudinal studies on the problem of the relationship and the deployment in time of these phenomena in different professional groups.

When Does Physician Use of AI Increase Liability?

An increasing number of automated and artificial intelligence (AI) systems make medical treatment recommendations, including personalized recommendations, which can deviate from standard care. Legal scholars argue that following such nonstandard treatment recommendations will increase liability in medical malpractice, undermining the use of potentially beneficial medical AI. However, such liability depends in part on lay judgments by jurors: when physicians use AI systems, in which circumstances would jurors hold physicians liable? Methods: To determine potential jurors’ judgments of liability, we conducted an online experimental study of a nationally representative sample of 2,000 U.S. adults. Each participant read 1 of 4 scenarios in which an AI system provides a treatment recommendation to a physician. The scenarios varied the AI recommendation (standard or nonstandard care) and the physician’s decision (to accept or reject that recommendation). Subsequently, the physician’s decision caused harm. Participants then assessed the physician’s liability. Results: Our results indicate that physicians who receive advice from an AI system to provide standard care can reduce the risk of liability by accepting, rather than rejecting, that advice, all else being equal. However, when an AI system recommends nonstandard care, there is no similar shielding effect of rejecting that advice and so providing standard care. Conclusion: The tort law system is unlikely to undermine the use of AI precision medicine tools and may even encourage the use of these tools.

Can Audit Committee Expertise Increase External Auditors' Litigation Risk? The Moderating Effect of Audit Committee Independence

ABSTRACTThis study examines whether the perceived independence and financial expertise of audit committee members affect external auditors' exposure to legal liability. We use an experiment in which potential jurors make judgments about auditor independence and legal liability for a case involving an audit failure. We find that perceptions of audit committee independence from management are positively associated with judgments of auditor independence and negatively associated with auditor liability. However, financial expertise of audit committee members can be a double‐edged sword. Our experiment finds that judgments of auditor liability are higher when the audit committee is perceived to have higher financial expertise but lower independence from management. In assessing litigation risk of current and prospective clients, auditors may want to carefully consider the independence of audit committee members from management, particularly when audit committee members have financial expertise. In the event of an audit failure, the financial expertise of nonindependent audit committee members can negatively affect jurors' perceptions of auditor independence and liability.

Can Automation Reduce the Effect of Independence Conflicts on Audit Firm Liability?

We conduct three experiments to examine whether increased automation can reduce the effects of independence conflicts on audit firm liability. Our experiments manipulate (1) whether procedures are performed by an auditor or an artificial intelligence and (2) whether the audit firm was careful in maintaining the appearance of independence from the audit client. Results of the first experiment identify that automation significantly reduces the effect of the appearance of independence conflicts on jurors’ judgments of audit firm liability. This effect is driven by changes in jurors’ trust in the audit process. A second experiment replicates this finding and provides additional process evidence, including evidence that jurors’ judgments are intentional. Our third experiment replicates the findings in a simpler setting with simpler manipulations to provide further robustness. Our study contributes to literature on auditor negligence, and advances understanding of how changes in the audit landscape might affect audit firm liability.

The Sound of Silence: What Does a Standard Unqualified Audit Opinion Mean Under the New Going Concern Financial Accounting Standard?

A recent FASB standard requires an entity’s management to assess the entity’s ability to continue as a going concern and disclose substantial doubt about such. In contextualized experiments wherein the entity’s auditor does not issue a going concern opinion and the entity subsequently fails, we examine the effects of this new standard on jurors’ judgments of auditor liability, operationalized as auditor blameworthiness for investor losses. We find: (1) when management has not disclosed going concern issues, blame ascribed to auditors for investor losses increases under the new standard; (2) auditor blame increases further when management has disclosed going concern issues; and (3) inclusion of a going concern-related critical audit matter (CAM) in the audit report mitigates these adverse effects of the new standard on auditor liability. These findings provide insights regarding unintended consequences to auditors of the new FASB standard and the efficacy of CAMs to mitigate those consequences.

Can Audit Committee Financial Expertise Increase External Auditors’ Litigation Risk? The Moderating Effect of Audit Committee Independence

Abstract: This study examines whether the perceived independence and financial expertise of audit committee members affect external auditors’ exposure to legal liability. We use an experiment in which potential jurors make judgments about auditor independence and legal liability for a case involving an audit failure. We find that perceptions of audit committee independence from management are positively associated with judgments of auditor independence and negatively associated with auditor liability. However, financial expertise of audit committee members can be a double-edged sword. Our experiment finds that judgments of auditor liability are higher when the audit committee is perceived to have higher financial expertise but lower independence from management. In assessing litigation risk of current and prospective clients, auditors may want to carefully consider the independence of audit committee members from management, particularly when audit committee members have financial expertise. In the event of an audit failure, the financial expertise of non-independent audit committee members can negatively affect jurors’ perceptions of auditor independence and liability.

Medical-legal aspects and risk management

Complications of spinal surgery are an important source of professional liability judgments for trauma surgeons and neurosurgeons who develop this subspecialty. The disc pathology leads all the rankings of claims against these professionals. [1,2,3] This situation does not attract attention, given that lumbar and cervical disc hernias are frequent affections and more and more surgeons are turning to this activity. For the current neurosurgeon, the pathology of the spine tends to represent 50% of its benefits [4]. The high cost of agreements and sentences in cases of spinal surgeries is a reflection of the infrequent but severe damage that can occur when working millimeters from the spinal cord and nerve roots. Spine surgery has all the ingredients that can make a trial a nightmare. In general, patients with pathologies that do not threaten life, where the main symptom (pain) has a strong subjective component and where often the opinions of experts differ between conservative and radical approaches. There are several alternatives that are not always adequately reported to the patient, who may be surprised at evolutions that were not anticipated. On the other hand, in the case of quadriplegic or paraplegic patients, the costs of lost profits and future expenses are usually millionaires [5,6,7,8]. It is an extensive, varied and complex discipline and there are many authors who suggest the need to convert it into a new specialty [4] [9,10]. Spinal surgery is technically difficult and acquiring the necessary skills demands years of learning. The margin of error is minimal and only careful attention to detail in the pre, intra and postoperative ensures consistent good results. When complications arise and judgments for professional responsibility, the rush in the surgical decision (except in cases of clear urgency) and the lack of adequate information to the patient are usually aspects widely debated by all parties.

Influencing Factors of Driving Decision-Making Under the Moral Dilemma

Autonomous vehicles (AVs) are supposed to make appropriate strategies to ensure driving safety and improve traffic efficiency. However, not all collisions will be avoidable. In a typical dilemma scenario of this paper, we have to make hard decisions from two evils, sparing a child with red-light running behavior or crashing into a well-equipped motorcycle driver without violation of the traffic law. Combined with the existing traffic laws and the accident liability judgment cases in China, 12 typical dilemma scenarios are established. In order to acquire data to analyze the driving decision-making factors involving ethics and legal under the moral dilemma of AVs, we conduct a series of experiments in virtual reality environments. Furthermore, key factors are extracted to characterize the driving decisions under different scenarios and quantified by the gray relation entropy analysis method. Particularly, the ethical factor is represented by the quantity and type of collision targets, the legal factor is qualified by rights of way. The results showed that priority levels of the influencing factors in each moral dilemma were considerably different. Nevertheless, when the quantity of collision targets on two sides is equal, more participants prefer to protect the ones that comply with traffic rules. The research results can provide the basis for designing moral algorithms for the AVs.

The study of the responsibility of persons who don’t have children as a promising area of psychological and pedagogical support of future parents

The article describes the problem of psychological support and training for such an untraditional category of people for a customized education system as people expecting or planning to have a child. The results of the study of responsibility as a personal property in the context of parent-child relationships are presented; in particular, the level of severity of the responsibility variables determined using the “Test of liability judgments” by A.I. Krupnova. The primary data underwent mathematical processing, which made it possible to determine the normality of the distribution of the sample, and subsequently establish statistically significant differences between harmonic and inharmonic responsibility variables. By mathematical processing of the data, the severity levels of the variables of the target, motivational, cognitive, productive, dynamic, emotional, regulatory and evaluative-reflexive components of responsibility are determined and the percentage of persons from the surveyed sample who have high, above average, average, below average and low levels is revealed parameters. Interpretation of the data obtained during the study, their analysis allow us to determine the features of the structure of responsibility of people who are expecting or planning to have a baby, as well as draw conclusions about the features of its development.

An analysis of 445 lawsuits of medical damage liability disputes in Beijing

Objective To identify departments involved, and the appraisal and compensation of such disputes in Beijing, for preventive recommendations. Methods A retrospective descriptive statistical analysis was carried out to retrieve and extract keywords from the first-instance judgments totaling 445 cases of medical damage liability disputes from 2014 to 2016 in Beijing.This analysis covered the age, disease, departments involved, liability judgment among other information.These cases were published at the website of China judgment documents. Results Patients with musculoskeletal connective tissue diseases, circulatory system disease and tumor accounted for the most lawsuits.The departments involved with more disputes were the department of gynecology and obstetrics(80/445, 18.0%), orthopedics(69/445, 15.5%), and emergency department(45/445, 10.1%).83.8 percent of the disputes were found with medical quality problems; and 84.3% were lost with compensations. Conclusions It is imperative to elevate the diagnosis and treatment level on musculoskeletal connective tissue diseases, circulatory system disease and tumors, and take precautions against disputes at such key departments as gynecology and obstetrics department, orthopedics department, and emergency department.Other precautions include normalized medical record writing, medical risk disclosure, higher medical quality and patient safety. Key words: Total quality management; Medical dispute; Appraisement; Lawsuit; Compensation

Rape perpetrator gender shapes liability judgments: Implications for disgust and moral outrage.

Rape perpetrator gender shapes liability judgments: Implications for disgust and moral outrage.

Mock juror sampling issues in jury simulation research: A meta-analysis.

The advantages and disadvantages of jury simulation research have often been debated in the literature. Critics chiefly argue that jury simulations lack verisimilitude, particularly through their use of student mock jurors, and that this limits the generalizabilty of the findings. In the present article, the question of sample differences (student v. nonstudent) in jury research was meta-analyzed for 6 dependent variables: 3 criminal (guilty verdicts, culpability, and sentencing) and 3 civil (liability verdicts, continuous liability, and damages). In total, 53 studies (N = 17,716) were included in the analysis (40 criminal and 13 civil). The results revealed that guilty verdicts, culpability ratings, and damage awards did not vary with sample. Furthermore, the variables that revealed significant or marginally significant differences, sentencing and liability judgments, had small or contradictory effect sizes (e.g., effects on dichotomous and continuous liability judgments were in opposite directions). In addition, with the exception of trial presentation medium, moderator effects were small and inconsistent. These results may help to alleviate concerns regarding the use of student samples in jury simulation research. (PsycINFO Database Record

Supplemental Material for Rape Perpetrator Gender Shapes Liability Judgments: Implications for Disgust and Moral Outrage

Supplemental Material for Rape Perpetrator Gender Shapes Liability Judgments: Implications for Disgust and Moral Outrage