Accounting - Research Publications

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Start date: 2006 × End date: 2009 × Subject: Auditing and Accountability × Author: CORAM, PAUL ×

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    The Value of Assurance on Voluntary Nonfinancial Disclosure: An Experimental Evaluation
    Coram, PJ ; Monroe, GS ; Woodliff, DR (AMER ACCOUNTING ASSOC, 2009-05)
    SUMMARY: This study examines whether assurance on the voluntary provision of nonfinancial performance indicators affects the stock price estimates of a group of sophisticated financial report users. We conducted an experiment where participants were provided with a case study containing excerpts from a hypothetical company's annual report. Nonfinancial performance and assurance were manipulated in a 2 (positive and negative nonfinancial performance indicators) ×2 (assurance and no assurance) +1 (control condition) between-subjects design. After reading the case materials, the participants indicated whether they believed the company's stock price would increase or decrease based on the information provided. As expected, we found that the nonfinancial performance indicators had a significant effect on stock price estimates. In addition, consistent with attribution theory, an assurance report on the voluntarily disclosed nonfinancial performance indicators only had a significant effect on stock price estimates when the nonfinancial performance indicators were positive, suggesting that the value of assurance is context-specific. Our research contributes to the discussion on the value of expanded assurance services and also on the value of enhanced corporate disclosure.
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    The moral intensity of reduced audit quality acts
    Coram, P ; Glavovic, A ; Ng, J ; Woodliff, DR (AMER ACCOUNTING ASSOC, 2008-05)
    Underlying attributes of reduced audit quality (RAQ) acts are investigated in this research paper. Since RAQ acts may result from ethical judgments, we examine whether they could vary because of differences in moral intensity. Moral intensity was proposed by Jones (1991) in a model that looked at the attributes of the moral issue itself. This study examines whether auditors perceive seven different RAQ acts to differ on three components of Jones' model (social consensus, magnitude of consequences, and probability of effect). Little variation was found on the social consensus dimension showing that auditors think the acts equally wrong. However, significant differences in perceptions about the RAQ acts relating to the probability of effect and the magnitude of consequences were found. The results suggest that RAQ acts differ in terms of their moral intensity, and hence auditors' decisions to undertake RAQ behavior may be issue-contingent. The study provides empirical support for Jones' model by showing, in an audit context, that moral intensity factors vary with the moral issue.