DOES THE AUDITOR'S OPINION MATTER? AN EXPERIMENTAL STUDY ON THE IMPACT ON THE DECISION OF NON-INSTITUTIONAL
INVESTORS
Name: DEBORA VIEIRA MIRANDA
Publication date: 29/09/2023
Examining board:
Name |
Role |
|---|---|
| VAGNER ANTONIO MARQUES | Advisor |
Summary: The purpose of this research was to verify the impact of the modified audit opinion on the
judgment and investment decision-making of Brazilian non-institutional investors. There is a
consensus among society in general that auditing ensures companies' financial reports, as
well as communicating the economic and equity situation of these organizations through the
Independent Auditor's Report (IAR) and, in this way, provides information and subsidies for
economic agents to make rational decisions based on this disclosure. In this sense, the
Inspired Confidence Theory stands out, in which the auditing activity, through the IAR and
the audit opinion, attributes confidence and credibility to the financial statements of
companies (Aziz et al, 2014). The accounting scandals of recent decades, however, have led
to criticism of the information content of the IAR. For this reason, international organizations
such as the IAASB and national ones such as the CFC have promoted regulatory changes that
have modified the structure of the IAR in order to increase its usefulness, among which NBC
TA 700 (ISA 700) and NBC TA 705 (ISA 705) stand out. These changes gave even more
focus to the auditor's opinion, which was moved from the third paragraph to the first
paragraph of the IAR (Prasad & Chand, 2017), giving it primacy and making its readers
attentive to its content (Cordos et al., 2020; Simnett & Huggins, 2014). Furthermore, in
Brazil, the category of non-institutional investors in capital markets has grown in recent
years. In this context, we carried out an experiment with a quantitative approach, with a 2x1
between-subjects design, manipulating (i) Unqualified Audit Opinion and (ii) Qualified Audit
Opinion, in which the participant made an investment decision based on a hypothetical
experimental scenario. The analysis techniques used were descriptive statistics, WilcoxonMann-Whitney, Kruskal-Wallis and marginal effects graphs, using R software to analyze the
data. The results indicated that the qualified audit opinion had a negative impact on the
decision making of Brazilian non-institutional investors, but had no significant effect on the
percentage values of investments. On the other hand, the sensitivity analysis demonstrated
that the adverse audit opinion and the abstention of an audit opinion affected both investment
decision-making and the percentage values of investments. These findings have the potential
to contribute to non-institutional investors, regulators, auditors, and academics, as they add
knowledge regarding the usefulness of RAI in its model in force as of 2016.
