Abstract Prior research demonstrates that audit professionals encounter client incivility. We extend this research by examining whether client incivility negatively impacts auditors' judgments and whether any adverse effects are reduced when auditors use coping strategies. We first collect descriptive survey evidence revealing that client incivility toward auditors is more widespread than currently documented. Next, using an experiment, we predict and find that auditors who experience client incivility (vs. those who do not) are less likely to challenge aggressive reporting if they are not prompted to cope. We also find that active coping reduces the adverse impact of client incivility, whereas findings for passive coping are inconclusive. Audit standards and users of financial statements expect auditors to fulfill their duty of maintaining a high level of professional skepticism irrespective of external circumstances. Our findings highlight the challenges auditors face in meeting these expectations when facing uncivil clients, thus posing a threat to audit quality.

ABSTRACT Performance-contingent cash and tangible rewards are commonly used to motivate employees, and the taxation of such rewards is unavoidable. We use two experiments to examine how the effect of reward taxation on employee effort varies by reward type. In Experiment 1, we find reward taxation decreases positive affect, increases negative affect, and decreases reward attractiveness for employees when rewards are tangible, but not when rewards are cash. In Experiment 2, we find reward taxation reduces employee effort when rewards are tangible, but not when rewards are cash. Collectively, this evidence advances knowledge at the intersection of tax and management accounting by explaining why reward type alters the effect of reward taxation on employee effort. Moreover, our experimental results inform managers of a potential downside to using tangible rewards to motivate employees. Data Availability: Authors will make data available on request. JEL Classifications: J41; M11; M52; M55.