Friends and Advisors: Knowledge Acquisition through Informal Relationships and Auditor Performance

Abstract

Prior research provides mixed findings regarding the role of social connections among auditors for knowledge acquisition and auditor performance. In this study we seek to provide new insights by viewing social connections as a multifaceted phenomenon and distinguishing between three types: advice-seeking, friendship, and overlapping ‘friendly-advice’ connections. Further, we account for the nuances of auditor performance by modeling the effects of these relationships on various technical and soft elements of job performance. Using data from the internal audit function of a publicly traded company, we find a negative relationship between pure advice-seeking connections and technical performance but no performance effects of pure friendship connections. However, seeking advice from peers who are considered friends is positively associated with some technical and soft components of performance. These findings provide evidence that affective relationships in the workplace can create a favorable context for knowledge-sharing among auditors positively impacting several elements of performance.

Keywords: auditor social networks, friendship connections, auditor performance