An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Larry Abbott
University of Memphis

Susan Parker
Santa Clara University

Gary F Peters
University of Arkansas

Abstract: We investigate the association between audit environment expertise and the extent of voluntary proprietary disclosures. Our proxies for audit environment expertise include auditor industry specialization and audit committee expertise. We use commodity derivative disclosures as a setting for voluntary proprietary disclosures. Specifically, we find that clients of specialized auditors issue less extensive commodity derivative disclosures. This result contrasts with prior literature that has concluded that the presence of auditors with industry expertise is associated with higher levels of client disclosure quality or transparency. This is important because it is not clear whether the results of prior studies are due to specialized auditors proactively affecting company disclosure policies or if the presence of auditor industry experts lends credibility to a company’s selected level of disclosure.

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