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Audit Adjustment Disputes: The Effect of Affective Commitment and Tenure on Audit Committee Judgment

Advances in Accounting Behavioral Research Volume 28

ISBN: 978-1-83608-285-9, eISBN: 978-1-83608-284-2

Publication date: 28 October 2024

Abstract

Audit committee members (ACMs) play a pivotal role in negotiating disputes between management and the external auditor concerning audit adjustments. Research suggests ACMs support the external auditor when audit adjustment conflicts arise. This study investigated the perceived effect of audit quality indicators (AQIs), through the mediating effect of affective reaction, on an ACM's recommendation for proposed audit adjustments. Audit firm tenure was examined as a moderating factor in both the effect of perceived AQIs on ACM's proposed adjustment and the relationship between perceived AQIs and affective reaction. Results suggested affective reactions created from perceptions of AQIs influence an ACM's decision-making. Audit firm tenure was found to moderate the relationship between perceptions of AQIs and affective reaction while not moderating the relationship between perceptions of AQIs and the ACM's proposed adjustment.

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Acknowledgements

Acknowledgments

This paper is based off my dissertation (2016) and I would like to thank my dissertation committee, and specifically Ed O'Donnell, my chair, and Marc Ortegren for guidance and support through the completion of this study. In addition, thank you to all the audit committee members who shared their observations and experiences about their decision-making process and participated in this study. I would also like to thank the reviewers and discussants at the AAA Annual Meeting (2017) and Ohio Region Meeting (2018) for their time and suggestions.

Citation

Keenan, E.S. and Wilson, A.B. (2024), "Audit Adjustment Disputes: The Effect of Affective Commitment and Tenure on Audit Committee Judgment", Karim, K.E. (Ed.) Advances in Accounting Behavioral Research Volume 28 (Advances in Accounting Behavioural Research, Vol. 28), Emerald Publishing Limited, Leeds, pp. 99-128. https://doi.org/10.1108/S1475-148820240000028005

Publisher

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Emerald Publishing Limited