Does Auditor Assurance of Client Prosocial Activities Affect Auditor-Client Negotiations?

Douthit, Jeremy; Kachelmeier, Steven J.; Landuyt, Ben W. Van

doi:10.2139/ssrn.3571812

Cited by 1 publication

(2 citation statements)

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“…We adapt the negotiation task from Church et al (2020), which creates an abstract setting with incentives that mirror the financial reporting and audit environments (Kachelmeier & King, 2002). Importantly, the task includes strategic “back‐and‐forth” interactions between auditors and managers (Bowlin et al, 2009, 2015; Church et al, 2020; Douthit et al, 2023; Hobson et al, 2020) and uses neutral language to avoid unintended inferences (Haynes & Kachelmeier, 1998). Participants are assigned to the roles of “verifiers” (auditors) and negotiate over “asset values” (financial statements) with paired “reporters” (managers).…”

Section: Experimental Studymentioning

confidence: 99%

“…Additionally, in our supplemental study with audit partners and managers, we support that limitations of the Hurtt scale are not essential to our study by (1) corroborating our study's findings using interviews that incorporate our new client service-skeptic personality measure and (2) showing that audit partners' and managers' Hurtt scores (including their scores with only the three dimensions) are correlated with their scores on this client service-skeptic measure. auditors and managers (Bowlin et al, 2009(Bowlin et al, , 2015Church et al, 2020;Douthit et al, 2023;Hobson et al, 2020) and uses neutral language to avoid unintended inferences (Haynes & Kachelmeier, 1998). Participants are assigned to the roles of "verifiers" (auditors) and negotiate over "asset values" (financial statements) with paired "reporters" (managers).…”

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confidence: 99%

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How does depletion interact with auditors' skeptical dispositions to affect auditors' challenging of managers in negotiations?

Bhaskar,

Majors,

Vitalis

2023

Contemporary Accting Res

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We use multiple methods to examine how depletion and auditors’ skeptical dispositions interact to affect auditors’ challenging of managers in negotiations over financial statement amounts. We expect auditors are likely depleted from effortfully exercising self‐regulation during the busy times when these negotiations occur. Individuals in a depleted state tilt toward natural, less effortful behaviors. Thus, we posit that the effects of depletion will diverge depending on the auditor's skeptical disposition―a determinant of how natural or effortful they will find the skeptical behaviors (e.g., challenging) versus client service behaviors (e.g., maintaining the client relationship and audit efficiency) required for negotiations. We predict that client service auditors (i.e., low skeptics) will challenge managers less in negotiations when depleted versus non‐depleted, while high skeptic auditors will challenge more when depleted. We test this interactive prediction in an abstract experiment where we manipulate depletion and measure auditors’ skeptical dispositions using trait skepticism. Findings support our predictions. We also develop a new measure of auditors’ client service–skeptic disposition based on the skepticism literature that adds nuance to the traditional lower versus higher skeptic labels. In a second study, interviews with audit partners validate the realism of our depletion and client service–skeptic constructs and corroborate our experimental findings. Our study sheds light on depletion effects in auditors’ negotiations with their clients and how the effects differ based on auditor personalities.This article is protected by copyright. All rights reserved.

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