Do Investors Care Who Did the Audit? Evidence from Form AP

63 Pages Posted: 14 Aug 2018 Last revised: 11 Sep 2020

See all articles by Marcus Doxey

Marcus Doxey

University of Alabama - Culverhouse School of Accountancy

James Lawson

Bucknell University

Thomas J. Lopez

University of Alabama - Culverhouse School of Accountancy

Quinn Thomas Swanquist

University of Alabama - Culverhouse School of Accountancy

Date Written: August 2020

Abstract

In early 2017, the PCAOB mandated the disclosure of audit participants, including the lead audit partner and other audit firms participating in the audit (“outside auditors”). In this study, we leverage this unique setting to examine whether investors find auditor identity useful. Using trading volume, absolute abnormal returns, and bid-ask spreads, we find little evidence of an investor response following the disclosure of partner identity or outside auditor participation in the first three years of the requirement. We also examine instances where these disclosures are most likely to be informative (e.g., partners associated with restatements or outside auditors with PCAOB deficiencies) and continue to find no significant investor response. Taken together, we find little evidence that capital markets respond to partner and outside auditor identity in the United States.

Keywords: Audit Partners, Capital Markets, Form AP

JEL Classification: M40, M42, M48

Suggested Citation

Doxey, Marcus M and Lawson, James and Lopez, Thomas J. and Swanquist, Quinn Thomas, Do Investors Care Who Did the Audit? Evidence from Form AP (August 2020). Available at SSRN: https://ssrn.com/abstract=3221383 or http://dx.doi.org/10.2139/ssrn.3221383

Marcus M Doxey (Contact Author)

University of Alabama - Culverhouse School of Accountancy ( email )

Tuscaloosa, AL 35487
United States

James Lawson

Bucknell University ( email )

701 Moore Ave.
Lewisburg, PA 17837
United States

Thomas J. Lopez

University of Alabama - Culverhouse School of Accountancy ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
205-348-2907 (Phone)

Quinn Thomas Swanquist

University of Alabama - Culverhouse School of Accountancy ( email )

Tuscaloosa, AL 35487
United States

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