How and why auditors’ social exchange relationships influence their attitudes and behaviors: Implications for audit quality

External auditors regularly interact with various parties at work such as their accounting firm, engagement team members, and clients. These interactions can help shape the nature of auditors’ social exchange relationships with these entities, which in turn may influence their behavior toward these targets. This installment of Accounting Matters draws from recently published research by Herda et al., (1) to explain how constructive auditor-target connections can develop and lead to beneficial outcomes like reduced auditor burnout and turnover intentions and more citizenship behavior, and (2) to discuss how these upshots might ultimately impact audit quality. This topic is important because audit quality translates into improved financial reporting which aids stakeholders who rely on audited financial statements to make informed business decisions. Specifically, we underscore the key role auditors’ perceptions of fair treatment from a relationship partner play in fostering a strong psychological bond with the target via perceived support. We further consider how auditors’ consequent commitment to the target can result in favorable organizational outcomes, including enhanced audit and financial reporting quality. Practical implications for accounting firms are discussed.