TOLERANCE FOR AMBIGUITY, UNCERTAINTY AUDIT QUALIFICATIONS AND BANKERSPERCEPTIONS

Using 24 bankers as volunteer subjects, this study examined the effect s of tolerance for ambiguity, a personality variable, on bankers' perc eptions of loan risk. Subjects who were classified as scoring high and low on tolerance for ambiguity on the basis of a median score split o n MacDonald's version of Rydell and Rosen's scale were given identical financial information about a company including a footnote disclosure on an uncertainty regarding pending litigation and a ''subject to'' a udit qualification. They were requested to estimate interest rate prem iums they would recommend for a loan application. The subjects' estima tes of interest rate premiums were used to operationalize loan risk. T olerance for ambiguity affected subjects' perceptions of loan risk, wi th individuals low on tolerance for ambiguity requiring higher interes t rate premiums than individuals high on tolerance for ambiguity.