The Effect of Negative Expectancy Violations and Relational Familiarity on Client Managers’ Negotiation Positions
Dodgson, Mary Kate, Agoglia, Christopher P., Bennett, G. Bradley
The Accounting Review · 2023 · Volume 98 · Issue 6
Abstract
During the interactive process of issue resolution, client managers may develop expectations about the auditor’s position. We examine the effect that negative expectancy violations have on managers’ pre-negotiation positions and how relational familiarity can moderate this effect. Through a series of experiments, we find that, when the partner’s proposed adjustment is within the client’s original expectations, managers offer greater concessions to a more familiar partner than to a less familiar partner. However, depending on relational familiarity, client managers react to expectancy violations very differently. Managers react more severely when a more familiar partner violates expectations, offering lower negotiation concessions than when no violation occurs. In contrast, managers tend to ignore violations committed by a less familiar partner, offering similar negotiation concessions whether or not a violation has occurred. Furthermore, we find support for a practical intervention to repair damage from expectancy violations committed by more familiar partners.
Keywords
auditor-client negotiation, auditor-client relationships, relational familiarity, partner tenure, expectancy violations, resolving audit differences
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