It is taken for granted that a fundamental conflict exists between auditors’ professional responsibilities and their commercial interests. While there is no direct evidence to support this widely held belief, it onetheless fuels extensive, costly regulatory and standard-setting activities. We propose to examine whether auditors’ commercial and professional motivations actually conflict. Moreover, we argue that quality control mechanisms in audit firms—e.g., performance evaluation and technical consultation procedures—create conditions in which the two sets of motivations are likely mutually reinforcing.
To test our research question, we will examine whether auditors’ commercial activity is related to indicators of audit quality such as individual performance evaluations and engagement quality reviews. We expect to find that firms reward auditors’ commercial activity. However, contrary to critics’ concerns, we also hypothesize that auditors’ commercial activity will be positively related to audit quality. For reasons
discussed in this note, we argue that auditors who base their professional identity more on being successful at commercial endeavors will be more willing to access quality control mechanisms (e.g., ask for help from consultations). As far as we are aware, our examination will provide the first direct evidence on the beneficial effects of commercial motivations for auditors.
