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Internal Auditors’ Use of Interpersonal Likability, Arguments, and Accounting Information in a Corporate Governance Setting

Posted: 21 Sep 2009 Last revised: 17 Jul 2014

Kirsten Fanning

University of Illinois at Urbana-Champaign

M. David Piercey

University of Massachusetts Amherst

Date Written: July 17, 2014

Abstract

Internal auditors play an important role in influencing managers’ judgments. Yet, the practitioner literature indicates that, because internal audit lacks the client services incentives of external audit, internal auditors often adopt a “policeman approach” that can lead to negative interpersonal relationships with managers. We investigate three variables fundamental to internal auditors’ ability to influence managers: (1) internal auditors’ interpersonal likability, (2) the information used to support their positions, and (3) whether they present that information in a thematically organized argument. We find that managers agree more with an internal auditor who is both likable and uses a thematically organized argument. We find further that this joint effect occurs regardless of whether the internal auditor’s information is relatively supportive or unsupportive of his position. Overall, our theory and findings suggest that an internal auditor can achieve agreement from managers on important corporate governance issues with this fairly straightforward presentation tactic, even when the underlying information is relatively unsupportive and managers otherwise tend not to agree with the internal auditor’s position. Our study contributes to accounting, psychology, and writing and discourse theories with new evidence of the effects of an argument structure (holding the underlying information constant) on users’ judgments, and how those effects depend on the likability of the source of information. Our findings have important implications for internal auditors, managers, external auditors, and others interested in corporate governance.

Keywords: corporate governance, internal audit, arguments, likability

JEL Classification: C91, M40, M41, M42, M49

Suggested Citation

Fanning, Kirsten and Piercey, M. David, Internal Auditors’ Use of Interpersonal Likability, Arguments, and Accounting Information in a Corporate Governance Setting (July 17, 2014). Accounting, Organizations and Society, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1476399 or http://dx.doi.org/10.2139/ssrn.1476399

Kirsten Fanning

University of Illinois at Urbana-Champaign ( email )

515 E. Gregory Drive
Champaign, IL 61820
United States
217-300-1981 (Phone)

M. David Piercey (Contact Author)

University of Massachusetts Amherst ( email )

Isenberg School of Management
121 Presidents Drive
Amherst, MA 01003
United States

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