Date Available
5-2-2013
Year of Publication
2013
Degree Name
Doctor of Philosophy (PhD)
Document Type
Doctoral Dissertation
College
Business and Economics
Department/School/Program
Accounting
First Advisor
Dr. Robert Ramsay
Abstract
Standard setters recently proposed increasing audit disclosures and reporting. Two experiments examine the effects of auditor-provided disclosures on financial statement users’ perceptions of auditor independence, management credibility, reporting quality, materiality, and investment decisions. In the first experiment, I manipulate auditor agreement with management’s estimates and whether the estimates are incentive-consistent for management. I find that users view auditors as more (less) independent when they agree (disagree) with management, given an unqualified opinion. I also find that users are able to identify management bias using audit disclosures, and that the disclosures are value-relevant. In the second experiment, I provide users with either an explicit or implicit materiality disclosure and elicit users’ materiality judgments either before or after the disclosure. I find that users’ materiality judgments are closer to the auditor’s when elicited after an explicit materiality disclosure. Path analysis demonstrates that users’ materiality judgments affect subsequent investment and audit-related judgments but do not affect important decisions related to auditor liability and investment. The findings provide empirical support for the argument that additional audit disclosures would increase the transparency and value-relevance of the audit report.
Recommended Citation
Doxey, Marcus M., "THE EFFECT OF INCREASED AUDIT DISCLOSURE ON INVESTORS' PERCEPTIONS OF MANAGEMENT, AUDITORS, AND FINANCIAL REPORTING: AN EXPERIMENTAL INVESTIGATION" (2013). Theses and Dissertations--Accountancy. 2.
https://uknowledge.uky.edu/accountancy_etds/2
