In this paper, we develop and test a conceptual model that posits how the timing of concessions
made by an auditor to a client influences negotiation judgments. We conduct an experiment to
investigate how financial officers’ negotiation-related judgments are influenced by negotiation
strategies employed by auditors. We manipulate between-subjects four negotiation strategies that
vary the timing of the concessions given, holding constant the total amount of concessions given.
These concessions vary in terms of whether they are given before the start of the negotiation,
after one round of negotiation, gradually during the negotiation, or at the end of the negotiation.
In our experiment, financial officers negotiate with a hypothetical auditor over four rounds of
negotiation. Our results support the use of giving gradual or delayed concessions, compared to
giving concessions early in the negotiation process. Our results are consistent with a mediation
model in which auditors’ negotiation strategies influence financial officers’ offers (given in the
round just before the auditor makes a final decision), which affects their satisfaction with the
negotiation outcome, and which, in turn, affects their intention to continue their relationship with
the auditor. We also provide evidence on the strategies used by financial officers.
Keywords: auditor-client negotiations, financial officers, negotiation strategy, concessions
Data availability: Contact author
