How Client Advocacy and a (Mis)Matched, Foreign Decision Environment Affect Auditor Judgment

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We investigate differences in auditor judgments when auditors are assigned to an engagement in a foreign country. We predict that the decision environment of the local firm office (operationalized as either principles-oriented or rules-oriented) will have a direct effect on experienced auditor judgment and will interact with client advocacy to influence an auditor’s recommendation on the disclosure of a contingent liability.
We find auditors with a higher (lower) level of advocacy and auditors assigned to a matched (mismatched), rules-oriented (principles-oriented) decision environment make judgments that are more (less) favorable to the client. We also find a moderation effect in which the advocacy affects judgment to a greater (lesser) extent in the matched (mismatched), rules-oriented (principles-oriented) local firm office environment. Our results help academics and auditors to understand the issues related to audit quality of a foreign audit engagements and international auditor labor mobility.
Original languageEnglish
Number of pages38
Publication statusPublished - 1 Apr 2019


  • JDM
  • disclosure
  • decision environment
  • client advocacy


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