The Use of Remedial Tactics in Negligence Litigation
36 Pages Posted: 16 Oct 2007 Last revised: 17 Sep 2009
Date Written: December 12, 2008
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: Suggested Citation