IDEAS home Printed from https://ideas.repec.org/a/eee/advacc/v62y2023ics0882611023000196.html
   My bibliography  Save this article

The effect of client gender and negotiation style on auditors' proposed audit adjustments

Author

Listed:
  • Hamrick, Jennifer
  • Schafer, Jennifer
  • DeZoort, Todd

Abstract

This study examines whether client gender affects the efficacy of two common negotiation strategies used by management when disputing a proposed audit adjustment. Eighty-two experienced auditors participated in an experiment in which CFO gender (female or male) and negotiation style (concessionary or contentious) were manipulated randomly between subjects. The results provide evidence of a gender-by-negotiation strategy interaction. Specifically, auditors are less likely to propose an audit adjustment for a male CFO who uses a contentious negotiation strategy as compared to the concessionary strategy. Conversely, auditors are more likely to propose an audit adjustment for a female CFO who uses a contentious negotiation strategy as compared to a male CFO who uses this same strategy. These findings indicate that the use of pressure-related tactics in negotiation is beneficial for male CFOs, but that female CFOs are penalized (as compared to male CFOs) for using contentious tactics.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:advacc:v:62:y:2023:i:c:s0882611023000196
    DOI: 10.1016/j.adiac.2023.100660
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0882611023000196
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.adiac.2023.100660?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bame-Aldred, Charles W. & Kida, Thomas, 2007. "A comparison of auditor and client initial negotiation positions and tactics," Accounting, Organizations and Society, Elsevier, vol. 32(6), pages 497-511, August.
    2. Mark Egan & Gregor Matvos & Amit Seru, 2022. "When Harry Fired Sally: The Double Standard in Punishing Misconduct," Journal of Political Economy, University of Chicago Press, vol. 130(5), pages 1184-1248.
    3. Ting-Chiao Huang & Hua-Wei Huang & Chih-Chen Lee, 2014. "Corporate executive’s gender and audit fees," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 29(6), pages 527-547, May.
    4. Kray, Laura J. & Galinsky, Adam D. & Thompson, Leigh, 2002. "Reversing the Gender Gap in Negotiations: An Exploration of Stereotype Regeneration," Organizational Behavior and Human Decision Processes, Elsevier, vol. 87(2), pages 386-410, March.
    5. Michael Gibbins & Susan A. McCracken & Steve E. Salterio, 2007. "The Chief Financial Officer's Perspective on Auditor†Client Negotiations," Contemporary Accounting Research, John Wiley & Sons, vol. 24(2), pages 387-422, June.
    6. 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.
    7. Eldar Maksymov, 2015. "Auditor evaluation of others’ credibility: A review of experimental studies on determinants and consequences✩," Journal of Accounting Literature, Emerald Group Publishing Limited, vol. 35(1), pages 104-124, November.
    8. Maksymov, Eldar, 2015. "Auditor evaluation of others’ credibility: A review of experimental studies on determinants and consequences," Journal of Accounting Literature, Elsevier, vol. 35(C), pages 104-124.
    9. Bill Francis & Iftekhar Hasan & Jong Chool Park & Qiang Wu, 2015. "Gender Differences in Financial Reporting Decision Making: Evidence from Accounting Conservatism," Contemporary Accounting Research, John Wiley & Sons, vol. 32(3), pages 1285-1318, September.
    10. Richard C. Hatfield & Christopher P. Agoglia & Maria H. Sanchez, 2008. "Client Characteristics and the Negotiation Tactics of Auditors: Implications for Financial Reporting," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1183-1207, December.
    11. Yan Sun & Hun†Tong Tan & Jixun Zhang, 2015. "Effect of Concession†Timing Strategies in Auditor–Client Negotiations: It Matters Who Is Using Them," Contemporary Accounting Research, John Wiley & Sons, vol. 32(4), pages 1489-1506, December.
    12. Simon Ho & Annie Li & Kinsun Tam & Feida Zhang, 2015. "CEO Gender, Ethical Leadership, and Accounting Conservatism," Journal of Business Ethics, Springer, vol. 127(2), pages 351-370, March.
    13. Hull, Rita P. & Umansky, Philip H., 1997. "An examination of gender stereotyping as an explanation for vertical job segregation in public accounting," Accounting, Organizations and Society, Elsevier, vol. 22(6), pages 507-528, August.
    14. Michael Gibbins & Steven Salterio & Alan Webb, 2001. "Evidence About Auditor–Client Management Negotiation Concerning Client’s Financial Reporting," Journal of Accounting Research, Wiley Blackwell, vol. 39(3), pages 535-563, December.
    15. Amanatullah, Emily T. & Tinsley, Catherine H., 2013. "Punishing female negotiators for asserting too much…or not enough: Exploring why advocacy moderates backlash against assertive female negotiators," Organizational Behavior and Human Decision Processes, Elsevier, vol. 120(1), pages 110-122.
    16. Bowles, Hannah Riley & Babcock, Linda & Lai, Lei, 2007. "Social incentives for gender differences in the propensity to initiate negotiations: Sometimes it does hurt to ask," Organizational Behavior and Human Decision Processes, Elsevier, vol. 103(1), pages 84-103, May.
    17. Jones, Joanne & MacTavish, Carolyn & Schultz, Wendy, 2019. "The effect of gender and firm identification on auditor pre-negotiation judgments," Advances in accounting, Elsevier, vol. 44(C), pages 49-57.
    18. Thompson, Leigh & Hastie, Reid, 1990. "Social perception in negotiation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 47(1), pages 98-123, October.
    19. Anderson, John C. & Johnson, Eric N. & Reckers, Philip M. J., 1994. "Perceived effects of gender, family structure, and physical appearance on career progression in public accounting: A research note," Accounting, Organizations and Society, Elsevier, vol. 19(6), pages 483-491, August.
    20. Hackenbrack, K, 1992. "Implications Of Seemingly Irrelevant Evidence In Audit Judgment," Journal of Accounting Research, Wiley Blackwell, vol. 30(1), pages 126-136.
    21. Steven E. Salterio, 2012. "Fifteen years in the trenches: Auditor–client negotiations exposed and explored," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 52, pages 233-286, October.
    22. Bamber, Em, 1983. "Expert Judgment In The Audit Team - A Source Reliability Approach," Journal of Accounting Research, Wiley Blackwell, vol. 21(2), pages 396-413.
    23. Gopal Krishnan & Linda Parsons, 2008. "Getting to the Bottom Line: An Exploration of Gender and Earnings Quality," Journal of Business Ethics, Springer, vol. 78(1), pages 65-76, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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).
    2. Bryan K. Church & Narisa Tianjing Dai & Xi (Jason) Kuang & Xuejiao Liu, 2020. "The Role of Auditor Narcissism in Auditor–Client Negotiations: Evidence from China," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1756-1787, September.
    3. Kray, Laura J. & Kennedy, Jessica A. & Van Zant, Alex B., 2014. "Not competent enough to know the difference? Gender stereotypes about women’s ease of being misled predict negotiator deception," Organizational Behavior and Human Decision Processes, Elsevier, vol. 125(2), pages 61-72.
    4. Yan Luo & Steven E. Salterio, 2021. "Toward an Archival Measure of the Likelihood of Auditor‐Client Management Negotiation: An Exploration of the Audit Lag Measures Conjecture†," Accounting Perspectives, John Wiley & Sons, vol. 20(1), pages 109-143, March.
    5. Laurence Daoust & Bertrand Malsch, 2020. "When the Client Is A Former Auditor: Auditees' Expert Knowledge and Social Capital as Threats to Staff Auditors' Operational Independence†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1333-1369, September.
    6. Jones, Joanne & MacTavish, Carolyn & Schultz, Wendy, 2019. "The effect of gender and firm identification on auditor pre-negotiation judgments," Advances in accounting, Elsevier, vol. 44(C), pages 49-57.
    7. 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).
    8. Cassandra Estep & Emily E. Griffith & Nikki L. MacKenzie, 2024. "How do financial executives respond to the use of artificial intelligence in financial reporting and auditing?," Review of Accounting Studies, Springer, vol. 29(3), pages 2798-2831, September.
    9. Brett, Jeanne & Thompson, Leigh, 2016. "Negotiation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 136(C), pages 68-79.
    10. Alaa Mansour Zalata & Collins Ntim & Ahmed Aboud & Ernest Gyapong, 2019. "Female CEOs and Core Earnings Quality: New Evidence on the Ethics Versus Risk-Aversion Puzzle," Journal of Business Ethics, Springer, vol. 160(2), pages 515-534, December.
    11. Victoria Bogdan & Delia Deliu & Tomina Săveanu & Olimpia Iuliana Ban & Dorina Nicoleta Popa, 2020. "Roll the Dice—Let’s See If Differences Really Matter! Accounting Judgments and Sustainable Decisions in the Light of a Gender and Age Analysis," Sustainability, MDPI, vol. 12(18), pages 1-31, September.
    12. Hart, Einav & Bear, Julia B. & Ren, Zhiying (Bella), 2024. "But what if I lose the offer? Negotiators’ inflated perception of their likelihood of jeopardizing a deal," Organizational Behavior and Human Decision Processes, Elsevier, vol. 181(C).
    13. Gull, Ammar Ali & Nekhili, Mehdi & Nagati, Haithem & Chtioui, Tawhid, 2018. "Beyond gender diversity: How specific attributes of female directors affect earnings management," The British Accounting Review, Elsevier, vol. 50(3), pages 255-274.
    14. Steffen Andersen & Julie Marx & Kasper Meisner Nielsen & Lise Vesterlund, 2021. "Gender Differences in Negotiation: Evidence from Real Estate Transactions," The Economic Journal, Royal Economic Society, vol. 131(638), pages 2304-2332.
    15. Zalata, Alaa Mansour & Abdelfattah, Tarek, 2021. "Non-executive female directors and earnings management using classification shifting," Journal of Business Research, Elsevier, vol. 134(C), pages 301-315.
    16. Dina El Mahdy & Fatima Alali, 2023. "Female CFOs and managerial opportunism," Review of Quantitative Finance and Accounting, Springer, vol. 60(3), pages 1161-1207, April.
    17. Najib A. Mozahem & Moniat El Noufous K. El Masri & Nazhat M. Najm & Samah S. Saleh, 2021. "How Gender Differences in Entitlement and Apprehension Manifest Themselves in Negotiation," Group Decision and Negotiation, Springer, vol. 30(3), pages 587-610, June.
    18. Hyun Ah Kim & Seok Woo Jeong & Tony Kang & Dongyoung Lee, 2017. "Does the Presence of Female Executives Curb Earnings Management? Evidence from Korea," Australian Accounting Review, CPA Australia, vol. 27(4), pages 494-506, December.
    19. Fröberg, Emelie & Säve-Söderbergh, Jenny & Wahlund, Richard & Wiley Wakeman, S., 2023. "The promise (and peril) in approaching gender parity: Preregistered survey experiments addressing gender inequality in negotiations," Labour Economics, Elsevier, vol. 83(C).
    20. Preeti Choudhary & Kenneth Merkley & Katherine Schipper, 2022. "The Costs of Waiving Audit Adjustments," Journal of Accounting Research, Wiley Blackwell, vol. 60(5), pages 1813-1857, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:advacc:v:62:y:2023:i:c:s0882611023000196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/advances-in-accounting/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.