Webtrust Sm (Version 3.0): Evidence On Consumers Demand For Assurance Services And CPAs Comparative Advantage

Modifications to Web Trust in version 3.0 allowing practitioners to issue an opinion on individual principles (e.g., privacy and security) enables WebTrust to compete directly against other assurance services. The success of the new strategy depends upon: (1) differences in assurance demand for the individual principles, and (2) perceptions that CPAs are the most trusted assurance provider. This study finds: (1) the need for assurance differs across individual WebTrust principles and depends upon transaction type, and (2) CPAs are not perceived to be the most trusted provider

The Moderating Effect of Third-Party Assurance on the Relationship Between CSR Disclosure and Investor Judgments

Abstract: Using a survey-based experiment, we investigate whether corporate social responsibility (CSR) disclosures can influence perceptions of corporate reputation and if these perceptions affect investors’ assessment of firms as attractive investments. After viewing CSR disclosures, participants were asked how they perceived the subject firm as a potential investment, and also how they assessed the firm’s reputation. Specifically, the subject firm’s CSR disclosure was manipulated to include either all-positive performance information or mixed information reporting that some CSR goals are not being achieved. A second manipulation divided disclosures into those that were based on information assured by a third-party and those that were not assured. Current MBA alumni and MBA students from an AACSB-accredited university were surveyed. The results supported the usefulness of assurance in promoting a positive firm image, particularly when only positive CSR performance information is reported. The effect of perceived corporate reputation on investment attractiveness was also found to be significant. Together, the findings suggest that when CSR disclosures are assured, they can positively influence investors’ assessments of corporate reputation, which in turn leads to greater investment attractiveness. Key Words: Corporate social responsibility, sustainability, voluntary disclosure, corporate reputation, investor judgements, assurance, Global Reporting Initiative

Corporate social responsibility risk and auditor–client retention

Literature suggests that firms engaging in irresponsible corporate social responsibility (CSR) activities are more likely to increase auditor\u27s engagement risk. Using audit firm tenure as a continuous measure for retention decisions made by either auditors or client firms, we find a significant and negative association between CSR risk and auditor tenure. Moreover, when the continuous variable audit tenure is replaced with a dichotomous variable auditor change, the likelihood of auditor change intensifies with increases in CSR risk. These results suggest that both clients and auditors are more likely to sever relationships when client firms exhibit high CSR risk than low CSR risk. This study has implications for future research on audit firm tenure and audit outcomes