Partner Identification in the Courtroom: The Role of Emotions and Counterfactual Thoughts and the Effectiveness of a Show-and-Tell Defense

• In Event: Effects of Audits on Investors and Jurors

Abstract

This study develops a serial mediation model of juror decision-making, to assess the impact of a plaintiff and defense strategy which evoke emotions and attentiveness to evidence and lead to a level of counterfactual thinking that predicts the frequency of negligence verdicts against audit firm defendants. The plaintiff strategy leverages the engagement partner’s identity and information from the PCAOB Form AP database to exploit hypothetically negative characteristics about the partner’s portfolio and thereby invoking negative emotions. For example, an indication that the partner’s workload was excessive or that they lacked industry expertise. We also examine a show-and-tell defense strategy that utilizes visuals to enhance evidence of due professional care and demonstrate its effectiveness as a remedial defense technique in this setting. We find that a show-and-tell approach increases juror attentiveness to evidence and breaks the cycle of counterfactual thinking brought on by the negative emotions, reducing negligence verdicts relative to a traditional tell-only approach. This strategy is also a successful remedial tactic in reducing guilty verdicts against the plaintiff strategy.

Authors

• Erin Burrell Nickell, Stetson University

• Lisa M Victoravich, University of Denver

• D. Jordan Lowe, Arizona State University - Tempe