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    Do Manages Intend to Use the Same Negotiation Strategies as...
    research summary posted November 5, 2014 by Jennifer M Mueller-Phillips, tagged 10.0 Engagement Management, 10.04 Interactions with Client Management, 11.0 Audit Quality and Quality Control, 11.05 Training and General Experience 
    Do Manages Intend to Use the Same Negotiation Strategies as Partners?
    Practical Implications:

    The findings of this study are important for audit firms to consider when resolving financial reporting issues with client management. The overall pattern of our results illustrates that audit managers and audit partners intend to use different negotiation strategies and, therefore, substituting managers for partners in order to increase audit efficiency may in some contexts undermine audit effectiveness. Indeed, concern is warranted based on these results that suggest that a manager’s intended strategy entering negotiations with client management may be, pending context, substantially different and more client-outcome-oriented than the partners’ intended strategy would be. This could be worrisome for audit partners if they are not aware of negotiations that managers are undertaking on their own while out in the field. From a practice perspective, partners need to be aware of circumstances where managers negotiate with client management, since the tactics employed and potentially the outcomes obtained by the manager may be different than if the partner had been involved. Thus, based on our findings, audit partners may be the more effective negotiators and, thus, will have better negotiated outcomes than less experienced managers.


    For more information on this study, please contact Susan McCracken.


    McCracken, S., S.E. Salterio, and R.N. Schmidt. 2011. Do managers intend to use the same negotiation strategies as partners? Behavioral Research in Accounting 23 (1): 131-160.

    Negotiation, strategy, experience, power, surrogate, auditor
    Purpose of the Study:

    Auditor-client management (ACM) negotiations frequently occur between the audit partner and the Chief Financial Officer, but there is also evidence that the audit manager attempts to negotiate resolutions to issues in order to increase audit efficiency, to increase the manager’s image of competence with the partner or in response to time pressures. Given the importance of ACM negotiations to the resulting financial statements shown in previous work in the ACM negotiation area, as well as the tendency for managers to conduct these negotiations in place of the partners, it is important to determine whether partners and managers intend to utilize similar or different negotiation strategies. From a practice perspective, if audit partners’ and managers’ intended negotiation strategies are different, then audit effectiveness may be compromised when managers undertake ACM negotiations. However, if the intended negotiation strategies of the partner and manager are the same, then there would be evidence to suggest that improvements in audit efficiency may be achieved by having managers undertake the ACM negotiations. Furthermore, from a research perspective, if there are differences in intended negotiation strategies between partners and managers, then results from prior studies that utilize managers as participants may not generalize to audit partners.

    Design/Method/ Approach:

    The experimental research evidence was collected in 2005. The authors measured the level of auditor participants (audit manager or audit partner) and manipulated the client management’s initial accounting position flexibility and ACM relationship in the experimental case context. After reading the case, participants were asked to indicate their likelihood of employing each of the 25 tactics related to the five negotiation strategies (expanding the agenda, problem solving, contending, compromising and conceding) in an upcoming negotiation with the client.

    • The integrative strategies’ results show that partners are less likely than managers to use the integrative strategy “expanding the agenda”. While less conclusive, our results also suggest that partners are less likely than mangers to use the integrative strategy “problem solving”. We find that this difference in planned strategy is not due to years of experience, but rather both of these findings are consistent with the power/status theory in the generic negotiation literature.
    • The distributive strategies’ results show that managers are less likely to use the contending strategy and more likely to use the concessionary and compromising strategies than partners. Our conclusions, however, must be qualified by the interaction of level with the accounting context factors embedded in the experimental case (prior client relationship and flexibility of client’s initial accounting position). An exception is the less commonly used concessionary strategy where we find managers are more likely to intend to use this strategy than the partners, irrespective of the accounting context. When examining the pattern of the interactions, we see a greater reaction to the accounting context by the partners than by the managers, again, likely due to partners’ greater experience and power/status in negotiations
    Audit Quality & Quality Control, Engagement Management
    Interactions with Client Management, Sustainability ServicesTraining & General Experience