The effect of client gender and negotiation style on auditors' proposed audit adjustments

Abstract

This study examines whether client gender affects the efficacy of two common negotiation strategies used by management when disputing a proposed audit adjustment. Eighty-two experienced auditors participated in an experiment in which CFO gender (female or male) and negotiation style (concessionary or contentious) were manipulated randomly between subjects. The results provide evidence of a gender-by-negotiation strategy interaction. Specifically, auditors are less likely to propose an audit adjustment for a male CFO who uses a contentious negotiation strategy as compared to the concessionary strategy. Conversely, auditors are more likely to propose an audit adjustment for a female CFO who uses a contentious negotiation strategy as compared to a male CFO who uses this same strategy. These findings indicate that the use of pressure-related tactics in negotiation is beneficial for male CFOs, but that female CFOs are penalized (as compared to male CFOs) for using contentious tactics.