The Relative Effectiveness of Simultaneous versus Sequential Negotiation Strategies in Auditor-Client Negotiations

Since most audit engagements identify multiple proposed audit adjustments, auditors must decide how best to present and negotiate these adjustments with their clients. Auditors may negotiate adjustments individually as they are uncovered (a sequential strategy) or they may aggregate identified adjustments together and negotiate them at the same time (a simultaneous strategy). This paper examines the relative effectiveness of a simultaneous versus sequential negotiation strategy in eliciting concessions from clients and engendering greater client satisfaction. Managers negotiated a series of audit adjustments with a simulated auditor who employed one of the two negotiation strategies. We find that a simultaneous strategy elicited significantly greater total concessions from managers and also generated greater positive affect. We also manipulate the magnitude of the issues negotiated and find that significantly greater concessions are offered when larger issues are presented first. Our findings suggest that an auditor's negotiation strategy choice can result in clients more readily accepting an auditor's preferred reporting position. The implications of these findings for accounting research and practice are discussed