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    The relative effectiveness of persuasion tactics in...
    research summary posted November 5, 2014 by Jennifer M Mueller-Phillips 
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    Title:
    The relative effectiveness of persuasion tactics in auditor-client negotiations.
    Practical Implications:

    The study suggests that, in certain contexts, auditors may achieve more favorable negotiation outcomes when they use a cooperative communication style and employ a strategy of notifying the client that other companies have handled the issue in a way consistent with the auditor’s preference. More generally, the findings suggest that auditors may benefit from training in persuasion tactics in order to achieve more desirable negotiation outcomes.

     

    For more information on this study, please contact Steve Perreault.

    Citation:

    Perreault, S., and T. Kida. 2011. The relative effectiveness of persuasion tactics in auditor-client negotiations. Accounting, Organizations & Society 36 (8): 534-547.

    Keywords:
    auditing, negotiation, persuasion
    Purpose of the Study:

    In this study, the authors examine the effectiveness of persuasive arguments that auditors may use to convince clients to accept their desired position in auditor-client negotiations.  In addition, they investigate how the style in which the argument is communicated by the auditor impacts its effectiveness.  The authors specifically investigate the effectiveness of four different persuasive arguments: threatening to qualify the audit opinion, warning of the possibility of a review by the firm’s quality control department, providing the opinion of a technical partner within the auditing firm, and informing the client that other companies have handled the issue in a way consistent with the auditor’s preference.  Each one of these arguments can easily and realistically be used by auditors in their negotiations with clients. They also examined the impact of using either a cooperative or contentious communication style during the negotiation, which involved the display of either positive or negative affect.

    Design/Method/ Approach:

    The research evidence was collected during the year 2010. Participants in the experimental study were practicing managers and professionals who were asked to assume the role of controller for a hypothetical manufacturing company whose financial statements were being audited. Participants then completed a computer-based instrument that simulated a multi-round negotiation with the auditor to resolve a subjective audit adjustment.

    The authors manipulated the type of persuasive argument used by the auditor by having him threaten to qualify the audit opinion, warn of the possibility of a review by the firm’s quality control department, provide the opinion of a technical partner within the auditing firm, or notify the client that other companies have handled the issue in a way consistent with the auditor’s preference. The second factor, communication style, was primarily manipulated by having the auditor use either contentious or cooperative language when negotiating with the client. This was accomplished by the inclusion of affectively laden statements from the auditor both before and after the persuasive argument was presented. The total concessions offered by participants during the negotiation, as well as their attitudes toward the auditor, were measured. 

    Findings:

    The authors found that, while threatening to qualify the audit opinion can result in significant client concessions, a tactic of simply informing the client that other companies have handled the accounting issue in a way consistent with the auditor’s preference is as effective, or more effective, than all of the other tactics examined at eliciting significant concessions as well as engendering positive attitudes toward the auditor. This result is consistent with findings from the persuasion literature relating to the pervasive power of social validation. The authors also find that clients offer more concessions, evaluate the auditor more positively, and are more satisfied with the negotiation outcome when auditors communicate their arguments using a cooperative, as opposed to a contentious, communication style. 

    Category:
    Engagement Management
    Sub-category:
    Interactions with Client Management