The effects of current and prospective regulation on investor perception of auditor independence: A theoretical framework and analysis.

摘要

Recently, the Securities and Exchange Commission (SEC) has questioned the adequacy of the existing auditor independence rules in maintaining investor confidence in capital markets. The rules, which restrict auditors' actions that may affect either investors' perceptions of auditor independence or actual auditor independence, were developed in the 1930s and have evolved in a piecemeal manner. The changing business environment may have made the existing rules obsolete. Also, rule violations by auditors have led to the issuance and proposal of several additional rules.;This dissertation integrates research from psychology to make predictions about the relative and combined values of existing and alternative rules on investor perceptions. It then tests the effect of existing rules, newly adopted communication requirements, and proposed rules on investors' perceptions of auditor independence. Two experiments are conducted in which Master in Business Administration students are asked to assume the role of an investor in a specific company and to evaluate the independence of the company's auditor. Auditor characteristics (denoted "auditor attributes") are varied and the likely effects of specific independence rules are tested. The rules tested relate to auditor ownership of client stock, audit partner compensation, nonaudit fees, auditor disclosures to audit committees, and audit firm type. The relative and combined effects of each attribute are measured using conjoint analysis, which captures the complexity and multi-dimensional nature of an investor's independence perception.;Results indicate that audit partner compensation, an attribute that is not currently addressed in the independence rules, has a greater effect on investors' independence perceptions than auditor ownership of small amounts of client stock (currently proscribed), and the provision of nonaudit services (currently proposed). In addition, with respect to auditor ownership of client stock, investors consider the amount of stock owned, the auditor's ability to influence audit results, and the auditor's control over the investment in their independence perceptions, even though existing rules do not make such distinctions. Finally, investors are willing to exchange some auditor restrictions for increased auditor disclosure to audit committees. These results imply that some existing independence rules may be relaxed without loss to investor independence perceptions.