The Effect of Auditor Identity Disclosure on Audit Quality: An Experimental Examination Incorporating the Incremental Effect of a Signature Requirement

• In Event: Behavioral Audit Research

Abstract

In an effort to increase audit quality, the Public Company Accounting Oversight Board recently undertook a standard-setting initiative to consider mandating the engagement partner’s signature on the auditor’s report (PCAOB, 2009). After obtaining public comments, however, the PCAOB decided not to propose a partner signature requirement in favor of proposing the disclosure of the engagement partner’s name in the audit report (PCAOB, 2011). We examine the audit quality effects of the two proposals considered by the PCAOB using an experimental audit market. In particular, we examine the ability of auditor identity disclosure to reduce auditor misreporting without and with a concurrent signature requirement. We find that auditor identity disclosure only reduces auditor misreporting when the signature requirement is present. Our results provide evidence that the PCAOB’s engagement partner identity disclosure requirement could be enhanced by a concurrent signature requirement and helps explain the frequent use of such signature requirements in non-U.S. countries.

Authors

• Allen D Blay, Florida State University

• Eric Sheldon Gooden, Virginia Commonwealth University

• Mark Joseph Mellon, University of South Florida

• Douglas E Stevens, georgia state university