Auditor Skepticism and Client Ill Will

Professional skepticism is considered an essential component of audit quality. Consequently, research has focused on ways to increase skepticism by identifying factors that either limit or encourage its practice. However, research has yet to explore potential negative consequences of professional skepticism. We conduct two experiments to investigate if high levels of skepticism create ill will in audit clients, and how ill will affects the auditor-client relationship and audit quality. In the first experiment, we find that high skepticism creates ill will in the client, which increases the likelihood the client recommends switching auditors and decreases the amount of evidence provided to the auditor. We find that auditors can ingratiate themselves with the client as an intervention to decrease the development of ill will and mitigate its adverse effects. In our second experiment, we examine if client pressure to persuade the auditor of their accounting position mitigates the relationship between high skepticism and ill will. We find an interaction such that if the evidence does not support the accounting treatment the client recommends, a high level of auditor skepticism does not cause clients to experience as much ill will toward the auditor. We contribute to the literature by investigating a new empirical construct, client ill will, and developing a more nuanced perspective of the interactions between auditors and their clients

Relative Performance Information and Employee Performance: The Role of Need for Cognition

Relative performance information (RPI) can be a valuable performance feedback mechanism within a management control system. However, it is likely that not all types of employees respond similarly to the implementation of RPI. Since firm resources are constrained and RPI requires considerable resources, our study seeks to understand what type of employees benefit most from the expectation of RPI. Specifically, we examine the personality trait of need for cognition (NFC). Using a laboratory experiment, we predict and find that an expectation of RPI results in increased performance for individuals low in NFC because it increases the amount of time they spend seeking out information in an effort-sensitive decision-making task. In contrast, an expectation of RPI has no effect on individuals high in NFC as they naturally seek performance-relevant information in the absence of expecting RPI. In an effort to increase the application of our findings, we employ a broadly-distributed survey to gather descriptive information on NFC by industry and job types. The results of this study provide important nuance to our understanding of RPI and how managers can better implement RPI to achieve the greatest effect