How Trial Preparation Factors Influence Audit Litigation Outcomes: Insights from Audit Litigators

Research indicates that auditors have an impoverished understanding of trial preparation factors that, independent of audit quality, can significantly elevate audit litigation risk. As the scholarly literature sheds little insight about the nature and implications of these factors, we identify what factors audit litigators consider in trial preparation, how they expect these factors to affect litigation outcomes, and how they attempt to lever these factors. To do so, we interview 39 audit litigators, who identify factors germane to trial venues, jury pools, and case arguments. Guided by the Elaboration Likelihood Model, we construct a framework that predicts these factors influence litigation outcomes by changing jurors’ motivation and/or capability to elaborate. Importantly, we find that litigators who defend (sue) auditors strategically maneuver these factors to increase (decrease) the likelihood of higher juror elaboration because it is favorable to auditors. We discuss implications of our results for practice and research.

Keywords: audit litigation, litigators, case merits, Elaboration Likelihood Model

JEL Classification: M4, M42, K22, K41

Suggested Citation: Suggested Citation

Maksymov, Eldar and Peecher, Mark E. and Pickerd, Jeffrey Scott and Zhou, Yuepin, How Trial Preparation Factors Influence Audit Litigation Outcomes: Insights from Audit Litigators (April 15, 2023). Available at SSRN: https://ssrn.com/abstract=3555475 or http://dx.doi.org/10.2139/ssrn.3555475