Auditors rate CEO misconduct less significant than investors do in new study
A University of Poole study published in the Journal of Business Ethics found auditors view executive crimes as less material to financial performance than investors do.
Study reveals expectation gap between roles
Researchers surveyed 163 people split into auditor and investor groups to compare their judgments. The group acting as auditors tended to see illegal acts by leaders as largely irrelevant to firm performance. Those assigned the investor role were significantly more likely to rate those same crimes as material concerns.
Professionals define materiality differently
Eileen Taylor, a professor of accounting, said this finding shows an expectation gap between professional standards and public assumptions. Professional auditing standards set by the PCAOB require information to alter the total mix for a reasonable investor. The study quantified how these two perspectives diverge when evaluating corporate misconduct.
Reported by one outlet
Only one outlet has published this. Nothing here has been checked against a second report, so read it as that outlet's account and follow the link below for the original.
Reported by
1 independent outlet. Headline as published. Links open the original report.