Abstract
The objective of this study was to examine the role of auditing experience, in auditor-client negotiations, in determining the value of the negotiated outcome. We also assessed whether it alters the effect of auditors’ concession timing-strategies on this outcome. Using an experimental method, we selected our respondents from two groups of financial officers (clients), those with and those without auditing experience. To determine the effect of the financial officers’ auditing experience and the concession-timing strategies adopted by their auditors, we measured the magnitude of the audit adjustment in an auditor-client negotiation. Our findings showed that auditing experience and concession-timing strategies affect the magnitude of the audit adjustments separately, but that auditing experience has no moderating effect on the relationship between concession timing and the final audit adjustment of the financial officers. A practical implication of this study is that it identified the ways in which auditor-client negotiations actually work. It is important that auditors obtain background information about their clients before they start a negotiation, as this information may affect its outcome.
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Notes
The case is three pages long, with Table 3 occupying a significant portion of a page.
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Acknowledgments
The authors would like to thank the two anonymous reviewers for their valuable comments and suggestions. We would like to express our gratitude to Hun-Tong Tan from Nanyang Technological University Singapore, for his constructive feedback and guidance
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Che Azmi, A., Voon, Y.H. The Effect of Clients’ Auditing Experience and Concession-Timing Strategies on Auditor-Client Negotiations. Group Decis Negot 25, 1049–1069 (2016). https://doi.org/10.1007/s10726-016-9474-x
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DOI: https://doi.org/10.1007/s10726-016-9474-x