The impact of changes to auditors' reporting and audit committee strength on bank directors' perceptions and decisions: An experimental investigation

Michelle Höfmann, Christiane Pott and Reiner Quick

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: This study investigates the impact of two changes to the auditor's report — a separate section addressing going concern uncertainties (GCU section [GCUsec]) and information on management and auditor responsibilities — and the characteristics of the audit committee on bank directors' perceptions and decisions. In a 2 × 2 × 2 between‐subjects experimental design with 85 German bank directors, we observe that a GCUsec in the auditor's report leads to more unfavourable decisions. Contrarily, explanations of responsibilities and different characteristics of the audit committee do not significantly impact on bank directors' perceptions and decisions. We thus confirm the effectiveness of the International Auditing and Assurance Standards Board (IAASB)'s revision of the International Standard on Auditing (ISA) 570 to enhance the informational value and decision usefulness of the auditor's report.

Date: 2024
New Economics Papers: this item is included in nep-acc
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Published in International Journal of Auditing 2 (2024) : pp. 408-431

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https://onlinelibrary.wiley.com/doi/10.1111/ijau.12308

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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:137703

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