Research and Publications - Culverhouse School of Accountancy

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    Do Investors Care Who Did the Audit? Evidence from Form AP
    (Wiley, 2021-05) Doxey, Marcus M.; Lawson, James; Lopez, Thomas J.; Swanquist, Quinn T.
    In early 2017, the PCAOB mandated the disclosure of audit participants, including the lead audit partner and other audit firms participating in the audit (“component auditors”). In this study, we examine whether investors use these disclosures in a way that influences their investment decisions, a primary goal of the PCAOB. Using trading volume, absolute abnormal returns, and bid-ask spreads, we find little evidence of a significant investor response following the disclosure of partner identity or component auditor participation in the first three years of the requirement. We also examine instances where these disclosures are most likely to be informative (e.g., partners associated with restatements or component auditors with PCAOB deficiencies) and find no significant investor response. Taken together, we find little evidence that capital markets respond to partner and component auditor identity in the United States.
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    Root Cause Analysis and its Effect on Auditors’ Judgments and Decisions in an Integrated Audit
    (Wiley, 2021-06) DeZoort, Todd; Doxey, Marcus; Pollard, Troy
    This study evaluates whether auditor use of root cause analysis (RCA) for an identified client misstatement affects auditors’ assessments of underlying control issues and materiality in an integrated audit setting. We also test whether auditor cognitive style moderates these effects given prior findings that a misfit between task structure and cognitive style undermines performance. We randomly assigned 147 auditors to four RCA treatments (No RCA, Unstructured RCA, Structured “5 Whys” RCA, Structured “Fishbone” RCA). The results suggest that auditors using (not using) structured RCA are more (less) likely to identify control-related root causes of a financial misstatement and judge the misstatement to be more (less) material. We also find that the assessed severity of identified control deficiencies mediates RCA’s effect on materiality judgments. Finally, the materiality judgment results reveal a significant interaction between structured RCA method and auditor cognitive style, suggesting the importance of allowing flexibility in the specific RCA method applied in practice.