Audit Trial Preparation and Why It Matters: The Other Side of the Story

Posted: 10 Apr 2020 Last revised: 29 Apr 2020

See all articles by Eldar Maksymov

Eldar Maksymov

Arizona State University (ASU) - School of Accountancy

Mark E. Peecher

University of Illinois at Urbana-Champaign; University of Illinois College of Law

Jeffrey S. Pickerd

The University of Mississippi

Yuepin (Daniel) Zhou

University of Illinois at Urbana-Champaign - Department of Accountancy

Date Written: March 16, 2020

Abstract

Prior research shows that audit litigation usually settles and that litigators settle based on their expectations of trial outcome. However, little research has examined how audit litigators develop trial outcome expectations. We fill this knowledge gap by interviewing 42 attorneys and trial consultants in audit litigation. We theorize an audit trial preparation model using the Story Model and the Aristotle’s per-suasion framework. Our results are consistent with our model and show that audit litigators develop and update trial outcome expectations throughout trial preparations by constructing their side’s story and by assessing the likelihood of their story persuading jurors. We also enrich our original model with a finding that, though litigators on both sides strive to appeal to credibility, plaintiff’s litigators choose to focus their story and to select jurors and trial venues so as to appeal to jurors’ emotions, while auditor’s litigators — to appeal to jurors’ logic. Our results indicate that litigators go to great lengths to select the trial venue and to construct the jury and the most persuasive story for that jury. These results highlight the importance of future experimental and qualitative research on juror judgment and characteristics. Our results also highlight the importance of future archival research on how trial venues and other factors identified in our study affect settlement outcomes. We discuss implications and identify fruitful venues for future research.

Keywords: audit litigation, story model of juror decision making, litigators

JEL Classification: M4, M42, K22, K41

Suggested Citation

Maksymov, Eldar M. and Peecher, Mark E. and Pickerd, Jeffrey Scott and Zhou, Yuepin, Audit Trial Preparation and Why It Matters: The Other Side of the Story (March 16, 2020). Available at SSRN: https://ssrn.com/abstract=3555475 or http://dx.doi.org/10.2139/ssrn.3555475

Eldar M. Maksymov (Contact Author)

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Mark E. Peecher

University of Illinois at Urbana-Champaign ( email )

Gies College of Business
1206 South Sixth Street
Champaign, IL 61820
United States
217-333-4542 (Phone)
217-244-0902 (Fax)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

Jeffrey Scott Pickerd

The University of Mississippi ( email )

University, MS 38677
United States

Yuepin Zhou

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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