Essays on Auditing and Auditor Conservatism

Abstract

This Doctoral Thesis is composed by three papers in auditing research examining specifically auditor conservatism, whether it is possible for an auditor to over- or under-audit a client and the consequences for the client firm. Specifically, chapter 1 looks at instances of auditor’s over-conservatism and how that may hinder the client’s financing ability and affect their investment efficiency. In chapter 2, we use hand-collected materiality information from the expanded audit report of firms from the U.K. and Ireland and research whether the auditor considers lenders, as stakeholders of the firm, information needs when setting materiality and whether this information is used ex-post. Finally, chapter 3 considers the possibility of materiality thresholds converging towards an “acceptable range” as a possible unintended consequence of making materiality public information, following previous research findings that auditors respond to public attention.