James E. Hunton
Bentley College
Jacqueline L. Reck
University of South Florida
Robert E. Pinsker
Old Dominion University
Abstract: The purpose of the current study is to examine how relatively unsophisticated investors respond to independent audit assurance on firm-released news announcements. Since individual investors are gaining sufficient numbers to 'move' the market, and the Internet allows for instantaneous access to news announcements, it is important to investigate the perceived value of independent assurance to relatively unsophisticated investors. This study contributes to extant understanding of how investors respond to auditor assurance, as it is the only study of this nature, to our knowledge, involving participants with a considerably low level of knowledge in the areas of accounting, auditing and investing; yet, unsophisticated investors of this profile reflect a growing proportion of the individual investing community. Research findings from this experiment suggest that the presence, as compared to absence, of independent audit assurance on firm-released news announcements increased mean stock price assessments, regardless of direction of news.
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