The Effects of Charismatic Clients on Auditors Objectivity

Abstract: This study empirically examines and attempts to model auditors’ relationships with their charismatic clients. Reviewing the prevailing research on charismatic leadership theories and auditor situation as well as related literature, we posit that the prevailing major models pertaining to charismatic leadership can be applied to extend and refine the current models of auditor acquiescence. After hypothesizing such a model, we design an instrument based on the revised Conger-Kanungo model used by (Su & Huang, 2004) to measure the extent to which auditor identify with a charismatic client. We then use the instrument to directly measure auditors’ attachment to the charismatic client and the threat of this attraction and attachment to auditors’ objectivity. Empirical results from our sample of N=192 auditors in the U.S and Sweden demonstrate that a new improved charismatic leadership model indeed could be emerged and fit to the actual situation of auditors. We specifically find an indication that Client Identification will increase the risk of auditor acquiescence. Combined with Professional identification driving increased the risk of Client identification, Professional Identification appears not to provide the resilience against acquiescence that we hypothesized. Instead the clear direct connection of the charismatic leadership affecting the auditors objectivity warrants study of a model where Client Identification and Professional Identification as mere variants of each other (Clients business just being another profession).