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Do Investors Benefit from Increased Auditor Independence and Auditor Expertise?

  • Author / Creator
    Marshall, Erin E
  • An implicit assumption of both audit regulation and research is that more auditor independence and more auditor expertise are better for society because they increase investor confidence and participation in markets. To test this assumption, I conduct a multi-period experiment where investors purchase assets in an environment with Auditor Independence (Independent, Non-Independent), Auditor Expertise (Expert, Average) and Information Asymmetry (High, Low). I find that sellers drastically overvalue auditor independence and auditor expertise in early periods and then, after receiving feedback, adjust their valuations downwards. Buyers do not overvalue auditor independence and auditor expertise and instead produce valuations closer to the expected value of the auditor certification. Auditors (rather than investors) extract most of the benefit of increased independence and expertise, especially in markets with high information asymmetry. There is no indication that increasing independence benefits investors.

  • Subjects / Keywords
  • Graduation date
    2015-06
  • Type of Item
    Thesis
  • Degree
    Doctor of Philosophy
  • DOI
    https://doi.org/10.7939/R3M90291W
  • License
    This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.
  • Language
    English
  • Institution
    University of Alberta
  • Degree level
    Doctoral
  • Department
    • Faculty of Business
  • Specialization
    • Accounting
  • Supervisor / co-supervisor and their department(s)
    • Jamal, Karim (Accounting, Operations and Information Systems)
  • Examining committee members and their departments
    • Weir, Heather (Accounting, Operations and Information Systems)
    • Huson, Mark (Finance and Statistical Analysis)
    • Maier, Michael (Accounting, Operations and Information Systems)
    • Emby, Craig (Accounting)