The joint effects of internal auditors' approach and persuasion tactics on managers' responses to internal audit advice

Timothy Brown, Kirsten Fanning

Research output: Contribution to journalArticlepeer-review

Abstract

Internal auditors frequently provide advice to managers as important input for accounting decisions. Recent practitioner guides have touted the merits of a participative or "coach" approach relative to a traditional "police officer" approach to the internal audit role. We conduct two experiments that test how managers respond to advice from an internal auditor using these different approaches. Results across both experiments suggest that when an internal auditor provides a professional favor (e.g., waives a standard investigation of an immaterial error), managers agree more with the internal auditor's advice only when he or she takes a participative approach. In contrast, a favor reduces managers' agreement with a more traditional internal auditor's advice. Our study contributes to practice by examining how an internal auditor's approach can change how favors influence corporate governance outcomes and contributes to the advice literature in accounting by highlighting the importance of expectancy confirmation.

Original languageEnglish (US)
Pages (from-to)173-188
Number of pages16
JournalAccounting Review
Volume94
Issue number4
DOIs
StatePublished - Jan 1 2019

Keywords

  • Advice
  • Corporate governance
  • Internal audit
  • Persuasion tactics

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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