How Does Audit Firm Emphasis on Client Relationship Quality Influence Auditors’ Inferences about and Responses to Potential Persuasion in Client Communications?

Audit firms’ client relationship management efforts may influence auditors’ evidence-gathering decisions. If auditors avoid pursuing certain types of evidence out of concern for making favorable impressions on clients, then auditors may be susceptible to persuasion that is potentially present in client-provided information. In an experiment, we examine a potential client persuasion tactic — expressed high confidence — under varying levels of audit firm-imposed pressure to satisfy clients. We examine how these factors influence auditors’ awareness of persuasion in a client’s explanation, and more importantly, we examine the types of additional evidence auditors seek in response to the client explanation. Consistent with the Persuasion Knowledge Model (Friestad and Wright 1994), we predict and find that under stronger client satisfaction pressure, when the client expresses high confidence in an explanation, auditors interpret such expressed confidence as a persuasion attempt, not an innocuous expression. However, auditors’ propensity to gather additional evidence that would substantiate the client explanation is greater only if they encounter high client confidence when they are under weaker client satisfaction pressure. Our results suggest that even though stronger client satisfaction pressure sensitizes auditors to a potential persuasion attempt, they are concerned about managing client impressions and make evidence-gathering decisions that are inconsistent with resisting persuasion and performing higher quality audits.