Strategic Game Manager - Auditor: Evidence of Game Theory

Document Type : Research Paper


1 Assistant Prof., Department of Accounting, Ferdowsi University of Mashhad, Mashhad, Iran

2 Ph.D Candidate, Department of Accounting, Ferdowsi University of Mashhad, Mashhad, Iran


Objective: The game theory attempts to model math behavior in a strategic situation. This situation occurs when the success of one side of the game depends on the strategies that the other party chooses. The purpose of this study is to find an optimal strategy for the interests of the parties in the game using the game theory approach.
Methods: The present study uses managers and auditors to maximize their profits, respectively, from profit management strategies and increasing the quality of the audit (reducing the risk of uncritical discovery). The statistical population of the study is a statistical society that is accessible to all companies admitted to the stock market by imposing restrictions on the years 1391 to 1395. Hypotheses for the combined data of 116 companies (575 companies of the year) were tested using the best responder response and the Mann-Whitney test.
Results: Research findings reveal the existence of “Nash equilibrium” in the strategy of high audit quality strategy and high earning management, therefore in this strategy, neither the auditor nor the manager has the incentive to change the strategy because they will reduce their interests by changing their strategy, Because they will reduce their interests by changing their strategy.
Conclusion: The results of the research indicate that it is important to consider the audit as a type of strategic environment. The findings of this research can help auditors in analyzing conflicts with the client and selecting the optimal strategy in the audit process.


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