The Value Relevance of Managers' and Auditors' Disclosures About Material Measurement Uncertainty

• 成果类型: Article
• 署名作者: Dennis, Sean A.; Griffin, Jeremy B.; Zehms, Karla M.
• 署名单位: State University System of Florida; University of Central Florida; University of Mississippi; University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52272
• 发表日期: 2019
• 页码: 215-243
• 关键词: matter paragraphs; working-memory; INFORMATION; RECOGNITION; judgments; DECISION; cost

摘要

Regulators now require auditors to provide information about how they evaluate complex estimates. Because users encounter this auditor-provided information alongside management-provided information, we jointly examine the value relevance of these disclosures. We also examine whether visual cues in audit reports influence how nonprofessional investors use these disclosures. We find that disclosures from managers and auditors provide different value-relevant information about the same underlying issue. While users struggle to weight fully narrative auditor disclosures in their valuation judgments without corresponding management disclosures, visual cues facilitate their weighting of information about the audit. Specifically, users take increased price protection when auditor disclosures also include visual cues. However, consistent with market signaling theory, corresponding voluntary disclosures from management attenuate this price protection. This suggests management can mitigate negative valuation effects that may arise from auditor disclosures, and implies that visual cues in audit reports can prompt managers to increase disclosure transparency.