Where do Auditors Seek Advice? Perspectives from Social Status and Social Capital

This paper examines the contributing factors of auditors’ advice seeking behaviors, using an egocentric network design that is typical in social network analysis. Drawing theoretical framework from emergence of advice network, we identify two important mechanisms for advice seeking, i.e., social status and social capital. By operationalizing the egocentric network in a multilevel analysis, we find that, across the board, auditors seek more advice from advisors with higher status, and seek less advice from advisors with lower status. This result provides evidence for social status. However, we find that as social capital increases, auditors also increasingly seek advice from advisors with lower status. Taken together, our results provide support for the external validity of the theoretical framework on the emergence of advice networks: although social status plays an important role that could potentially hinder mutual knowledge sharing, social capital can mitigate this effect. Our findings have important implications for audit firms to design effective and efficient audit teams.