Abstract

http://ssrn.com/abstract=1931699
 
 

References (46)



 


 



Investors' Perceptions of Audit Quality: Effects of Regulatory Change


Jason L. Smith


University of Nevada, Las Vegas

September 12, 2011

Auditing: A Journal of Practice & Theory, 31 (1): 17-38.

Abstract:     
In an experiment using MBA students as proxies for individual investors, I examine the effects of two important regulatory changes on investors’ perceptions of audit quality. The first change examined is from a bottom-up coverage-based approach for auditing internal controls to a more top-down risk-based approach. The second change is litigation reform further limiting auditor liability exposure following an alleged audit failure. I find that investors perceive a reduction in audit quality following each of the two regulatory changes. These observed effects are mediated by a perceived focus on efficiency for the new auditing standard and by a perceived change in the auditor’s economic incentives following the proposed litigation reform. I also find that investors believe the perceived reduction in audit quality will lead management to invest fewer resources in internal controls.

Keywords: audit quality, investor perceptions, internal control, auditor liability

Accepted Paper Series


Not Available For Download

Date posted: September 21, 2011 ; Last revised: May 1, 2013

Suggested Citation

Smith, Jason L., Investors' Perceptions of Audit Quality: Effects of Regulatory Change (September 12, 2011). Auditing: A Journal of Practice & Theory, 31 (1): 17-38. . Available at SSRN: http://ssrn.com/abstract=1931699

Contact Information

Jason L. Smith (Contact Author)
University of Nevada, Las Vegas ( email )
4505 S. Maryland Parkway
Las Vegas, NV 89154
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,087

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.391 seconds