Psychological bonds and their impact on behavioral loyalty in auditor-client relationships

Purpose – The purpose of this paper is to examine the effect of the psychological bond on behavioral loyalty (word-of-mouth, continuance and non-audit services) to audit firms providing services to companies listed on the Polish Stock Exchange. Design/methodology/approach – A model is proposed and tested using structural equation modeling with LISREL. Data were collected from top executives of companies listed on the Warsaw Stock Exchange. Findings – The psychological bond has a positive effect on word-of-mouth, continuance and non-audit services. Research limitations/implications – The current research is limited to the investigation of the psychological bond as an antecedent of behavioral loyalty in Poland. Future research should identify and assess other antecedents and replicate these across different countries. A longitudinal survey across different points in time might reveal more useful information about auditor-client relationships. Practical implications – Auditors need to consider ways in which they can develop the psychological bond with their clients. This bond is the basis for the client believing the audit firm is superior to others, which has been found to lead to behavioral loyalty in this study. In particular, management of the auditor brand and reputation, personal experience of the audit firm and alumni relations are discussed as ways of enhancing the psychological bond among client executives. Originality/value – This study is the first to examine the impact of the psychological bond on behavioral loyalty in auditor-client relationships.

A review of the rationales for corporate risk management: fashion or the need?

This paper presents the extensive literature survey based both on theoretical rationales for hedging as well as the empirical evidence that support the implications of the theory regarding the arguments for the corporate risk management relevance and its influence on the company’s value. The survey of literature presented in this paper has revealed that there are two chief classes of rationales for corporate decision to hedge - maximisation of shareholder value or maximisation of managers’ private utility. The paper concludes that, the total benefit of hedging is the combination of all these motives and, if the costs of using corporate risk management instruments are less than the benefits provided via the avenues mentioned in this paper, or any other benefit perceived by the market, then risk management is a shareholder-value enhancing activity.

More public rescues for more private finance failures - a critique of the EC Communication on PPPs

A critique of the EC Communication on PPPs, challenging the scale of state aid offered to PPPs, the role of PPPs in the economic recovery strategy for the EU, and drawing attention to the damage done to public authorities by 'innovative' financing mechanisms.