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Competence trust, goodwill trust and negotiation power in auditor-client relationships

Daniela Maresch (Department of Entrepreneurship and Relationship Management, Det Samfundsvidenskabelige Fakultet, Syddansk Universitet, Odense, Denmark) (Institute for Innovation Management, Johannes Kepler Universitat Linz, Linz, Austria)
Ewald Aschauer (Johannes Kepler Universitat Linz, Linz, Austria)
Matthias Fink (Johannes Kepler Universitat Linz, Linz, Austria)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Article publication date: 25 November 2019

Issue publication date: 31 March 2020




The purpose of this paper is to investigate how competence trust (i.e. trust regarding the ability of the counterpart) and goodwill trust (i.e. trust regarding the benevolence and integrity of the counterpart) affect the probability that the auditor or the client stand up to the respective negotiation partner’s position in situations of disagreement in the auditing relationship.


Two experiments were conducted, one with 149 auditors and one with 116 chief financial officers (CFOs). Both auditors and CFOs had to indicate the likelihood that they stand up to the other party’s preferred position in a disagreement on the materiality of unrecorded liabilities. The data derived from these experiments were analyzed using hierarchical OLS.


The results indicate that both auditors and CFOs who take their respective negotiation partner in the audit for highly competent are less likely to stand up to them in situations of disagreement. Interestingly, goodwill trust appears to be irrelevant for the negotiation outcome.

Practical implications

The findings are highly relevant for regulators, because they inform about the crucial importance of competence trust for the auditing negotiation outcome and thus put the so-called “trust-threat” into perspective.


The study adds to the literature on the role of the context for auditor-client negotiations by exploring the role of two distinct forms of trust on the outcome of these negotiations.



Maresch, D., Aschauer, E. and Fink, M. (2020), "Competence trust, goodwill trust and negotiation power in auditor-client relationships", Accounting, Auditing & Accountability Journal, Vol. 33 No. 2, pp. 335-355.



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