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The relative effectiveness of persuasion tactics in auditor–client negotiations

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  • Perreault, Stephen
  • Kida, Thomas

Abstract

In this study, we examine the effectiveness of four persuasive arguments that auditors may use to convince clients to accept their desired position in auditor–client negotiations. In addition, we investigate how the style in which the argument is communicated by the auditor impacts its effectiveness. Our results indicate that the type of persuasion tactic used by auditors significantly impacts the amount of concessions made by clients. Specifically, we find that, while threatening to qualify the audit opinion can result in significant client concessions, a tactic of simply informing the client that other companies have handled the accounting issue in a way consistent with the auditor’s preference is as effective, or more effective, than all of the other tactics examined at eliciting significant concessions as well as engendering positive affect toward the auditor. This result is consistent with findings from the persuasion literature relating to the pervasive power of social validation. We also find that clients offer more concessions, evaluate the auditor more positively, and are more satisfied with the negotiation outcome when auditors communicate their arguments using a cooperative, as opposed to a contentious, communication style. The results of this study indicate that auditors may benefit from training in persuasion tactics in order to achieve more desirable negotiation outcomes.

Suggested Citation

  • Perreault, Stephen & Kida, Thomas, 2011. "The relative effectiveness of persuasion tactics in auditor–client negotiations," Accounting, Organizations and Society, Elsevier, vol. 36(8), pages 534-547.
    • Handle: RePEc:eee:aosoci:v:36:y:2011:i:8:p:534-547
    DOI: 10.1016/j.aos.2011.09.001
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    1. Fanning, Kirsten & David Piercey, M., 2014. "Internal auditors’ use of interpersonal likability, arguments, and accounting information in a corporate governance setting," Accounting, Organizations and Society, Elsevier, vol. 39(8), pages 575-589.
    2. Aghazadeh, Sanaz & Hoang, Kris, 2020. "How does audit firm emphasis on client relationship quality influence auditors’ inferences about and responses to potential persuasion in client communications?," Accounting, Organizations and Society, Elsevier, vol. 87(C).
    3. Yim, Andrew, 2013. "Mixture and Continuous 'Discontinuity' Hypotheses: An Earnings Management Model with Auditor-Required Adjustment," MPRA Paper 44702, University Library of Munich, Germany.
    4. Dodgson, Mary Kate & Agoglia, Christopher P. & Bennett, G. Bradley, 2021. "The influence of relationship partners on client managers’ negotiation positions," Accounting, Organizations and Society, Elsevier, vol. 92(C).
    5. Svanberg, Jan & Öhman, Peter & Neidermeyer, Presha E., 2019. "Auditor objectivity as a function of auditor negotiation self-efficacy beliefs," Advances in accounting, Elsevier, vol. 44(C), pages 121-131.
    6. Bills, Kenneth L. & Cobabe, Matthew & Pittman, Jeffrey & Stein, Sarah E., 2020. "To share or not to share: The importance of peer firm similarity to auditor choice," Accounting, Organizations and Society, Elsevier, vol. 83(C).
    7. Hamrick, Jennifer & Schafer, Jennifer & DeZoort, Todd, 2023. "The effect of client gender and negotiation style on auditors' proposed audit adjustments," Advances in accounting, Elsevier, vol. 62(C).
    8. Obermire, Kara M. & Cohen, Jeffrey R. & Zehms, Karla M., 2021. "Audit committee members’ professional identities: Evidence from the field," Accounting, Organizations and Society, Elsevier, vol. 93(C).
    9. Thiéry, Stéphanie & Lhuillery, Stephane & Tellechea, Marion, 2023. "How can governance, human capital, and communication practices enhance internal audit quality?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).
    10. Blaufus, Kay & Lorenz, Daniela & Milde, Michael & Peuthert, Benjamin & Schwäbe, Alexander N., 2022. "Negotiating with the tax auditor: Determinants of tax auditors' negotiation strategy choice and the effect on firms’ tax adjustments," Accounting, Organizations and Society, Elsevier, vol. 97(C).
    11. Marie Caussimont & David Carassus, 2015. "L’audit financier en contexte territorial : vers un audit de performance de la gestion locale ?," Post-Print hal-02141946, HAL.

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