The Use of Remedial Tactics in Negligence Litigation

36 Pages Posted: 16 Oct 2007 Last revised: 17 Sep 2009

See all articles by Robert M. Cornell

Robert M. Cornell

Oklahoma State University - Stillwater - School of Accounting

Rick C. Warne

University of Cincinnati - Department of Accounting

Martha M. Eining

University of Utah - School of Accounting and Information Systems

Date Written: December 12, 2008

Abstract

Prior research suggests that negative outcomes affect judge and juror judgments of auditor actions, contrary to the intent of the legal system. We experimentally examine whether remedial tactics (apology and first-person justification) cause lower frequencies of negligence verdicts against an auditor in a civil litigation case. Our results indicate that apology and justification individually result in lower frequencies of negligence verdicts when compared to a control group receiving no remedial tactic. We also find that the use of both tactics together does not provide incremental benefit over either one of the tactics individually. Additionally, we present evidence that remedial tactics result in lower assessments of auditors' responsibility to detect fraud. While prior research finds that remedial tactics mitigate the assessment of blame by directly-injured parties, our results expand theory by providing evidence that remedial tactics also impact the decisions of unharmed observers.

Keywords: auditor litigation, apology, justification, remedial tactics, outcome

JEL Classification: M49, K22

Suggested Citation

Cornell, Robert M. and Warne, Rick C. and Eining, Martha M., The Use of Remedial Tactics in Negligence Litigation (December 12, 2008). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1020089 or http://dx.doi.org/10.2139/ssrn.1020089

Robert M. Cornell (Contact Author)

Oklahoma State University - Stillwater - School of Accounting ( email )

College of Business Administration
345 Business Building
Stillwater, OK 74078
United States

Rick C. Warne

University of Cincinnati - Department of Accounting ( email )

Cincinnati, OH 45221-0211
United States

Martha M. Eining

University of Utah - School of Accounting and Information Systems ( email )

1645 Campus Center Drive
Salt Lake City, UT 84112
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
156
Abstract Views
1,900
rank
240,308
PlumX Metrics