Auditor independence and client economic power: Qualitative evidence and propositions involving auditors’ emotions and moral reasoning

This study views auditor independence decision-making as holistic, complex andinterpersonal, where human elements including emotions come into play when challenged bya morally intense situation. The idea of emotions affecting auditor independence judgmentshas had little attention in auditing research. In fact, rationality and emotions cannot beseparated because they are part of the human condition, often complimenting each other indecision making. To reflect this view, our interactionist model of auditors’ complex decisionmaking includes Rest’s four-component model, (1) moral sensitivity, (2) moral reasoning,and (3) moral motivation as decision-making processes culminating in moral behavior thatdenotes (4) moral character. We propose that client management economic pressure is asituation of high moral intensity that sensitizes auditors’ emotions and thus motivates theirmoral reasoning to make deliberative decisions either to resist (a moral judgment) or accedeto client management wishes, showing principled, accommodating or pragmatic character.