The Impact of Audit Committee Strength on the Influence of Management Team Likeability

Abstract

The dynamics of the auditor-client interaction can provide cues and information that may affect audit quality beyond the collection of evidence. However, more research is needed to understand how certain cues from these interactions might factor into auditor decisions. Using the Elaboration Likelihood Model as a theoretical framework, we provide insight into how auditors use client management team likeability in their audit judgments. Our results suggest that audit committee strength influences auditor elaboration, thereby shifting how auditors use likeability as an information cue. We find that, when there is a weak (strong) audit committee, auditors use less (more) elaboration, which causes their inventory write-down judgments to be more (less) influenced by unlikeable client management teams. Moderated mediation analyses support the Elaboration Likelihood Model, providing a starting point for future research to examine other auditing judgments that could be affected by this theory. Data Availability: Data are available at http://www.osf.io/ under doi number 10.17605/OSF.IO/8VZKQ.