The Interplay of Interpersonal Affect and Source Reliability on Auditors’ Inventory Judgments

Posted: 25 Apr 2009

See all articles by Tracey Riley

Tracey Riley

Suffolk University - Sawyer School of Management

Kimberly Moreno

Northeastern University - Accounting Group

Sudip Bhattacharjee

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems

Date Written: April 20, 2009

Abstract

While prior auditing research has examined auditors’ sensitivity to source reliability, this research has primarily focused on source characteristics including competence, objectivity and integrity. However, psychology research suggests that the persuasion process is more complex with other source characteristics that can influence persuasion. One such factor that has been identified in prior psychology research as impacting persuasion is interpersonal affect toward the source. This source characteristic is particularly relevant to the auditing domain since auditors gather a predominant amount of evidence through interpersonal interactions with client management, and these interactions are likely to generate emotional reactions toward the client. Using structural equation modeling, the first part of this research establishes the role of interpersonal affect on auditor persuasion. In addition, since auditors will be interacting with clients with multiple source characteristics, we examine how interpersonal affect interacts with source competence to impact persuasion. We propose and find that interpersonal affect toward client management impacts auditors’ judgments and workpaper documentation when client competence is low but has no influence on auditors’ judgments or documentation when client competence is high. These results extend both accounting and psychology research by lending insight into the boundaries of interpersonal affect’s influence on persuasion and auditor decision making. These findings have implications for audit practice as they provide insight into an underexplored factor, interpersonal affect, that exists in the audit environment and can impact performance.

Suggested Citation

Riley, Tracey and Moreno, Kimberly and Bhattacharjee, Sudip, The Interplay of Interpersonal Affect and Source Reliability on Auditors’ Inventory Judgments (April 20, 2009). Available at SSRN: https://ssrn.com/abstract=1392419

Tracey Riley

Suffolk University - Sawyer School of Management ( email )

Boston, MA 02108
United States

Kimberly Moreno

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Sudip Bhattacharjee (Contact Author)

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems ( email )

Pamplin College of Business
Blacksburg, VA 24061
United States

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