Audit Partner Signature Disclosure Effects on Non-Professional Investors’ Credibility Assessments and Liability Perceptions

41 Pages Posted: 29 Aug 2019

Date Written: August 12, 2019

Abstract

Restoring the credibility of the auditor’s report through an audit partner’s signature disclosure has been the subject of recent auditing standard setting. This study presents an experimental examination of the effect of an audit partner’s signature disclosure on non-professional investor credibility assessments of audit opinions and perceived audit partner liability. We find that disclosing the audit partner’s signature enhances audit opinion credibility unless obtainable information is over-endorsed by the disclosure. However, we could not detect any substantial effect of audit partner signature disclosure on perceived audit partner liability. We provide evidence consistent with source credibility theory that the audit partner’s signature is used as a heuristic cue in information processing, thereby affecting non-professional investors’ judgments. In light of the increasing interest in and reforms of the auditor’s report, our findings contribute to a decade of auditing standard setting discussions and relativize the perceived liability threats linked to audit partner related disclosures.

Keywords: audit opinion credibility, audit partner liability, audit partner signature, heuristic cues, disclosure

JEL Classification: D83, L15, M4, M42, M48

Suggested Citation

Schlueter, Julia K. M. and Ratzinger-Sakel, Nicole V.S., Audit Partner Signature Disclosure Effects on Non-Professional Investors’ Credibility Assessments and Liability Perceptions (August 12, 2019). Available at SSRN: https://ssrn.com/abstract=3442568 or http://dx.doi.org/10.2139/ssrn.3442568

Julia K. M. Schlueter (Contact Author)

University of Hamburg ( email )

Moorweidenstraße 18
Hamburg, 20148
Germany

Nicole V.S. Ratzinger-Sakel

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

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