Graduation Year


Document Type




Degree Name

Doctor of Philosophy (Ph.D.)

Degree Granting Department


Major Professor

Lisa Milici Gaynor, Ph.D.

Co-Major Professor

Uday S. Murthy, Ph.D.

Committee Member

Mark H. Taylor, Ph.D.

Committee Member

Chad Dubé, Ph.D.


disclosure pattern, experiment, nonprofessional investor, multi-year, processing fluency, signaling theory, behavior analytics


A new auditor reporting standard requires auditors to disclose critical audit matters (CAMs) in the auditor’s report. CAMs highlight accounts or disclosures that involved especially challenging, subjective, or complex auditor judgment. As one of few audit-related disclosures, CAMs act as an important signal of qualitative aspects of recognized (i.e., items shown on the face of the financial statements) or disclosed (i.e., items shown in the footnotes of the financial statements) financial statement items. While certain accounts or disclosures will consistently rise to the level of a CAM, other accounts or disclosures may only rise to the level of a CAM when circumstances dictate. Therefore, different CAM disclosure patterns will emerge over time, potentially changing investors’ information processing and investment-related judgments and decisions. My study examines how two CAM disclosure characteristics—disclosure pattern and reporting treatment of a CAM-related item—influence investors’ information processing, risk perceptions, and investment decisions. Consistent with processing fluency, I find that a recurring CAM disclosure pattern (i.e., same CAM reported over time) compared to a mixed CAM disclosure pattern (i.e., a combination of recurring and transient CAMs reported over time) is processed with greater fluency and leads to more favorable judgments of risk and higher investment amounts. Additionally, investors perceive the highest (lowest) level of risk when a mixed (recurring) CAM disclosure pattern is combined with a disclosed (recognized) item and invest the least (most) amount of money. The results of this study contribute to accounting literature, standard-setting, and practice by disentangling the signaling effects of CAM disclosures over time.

Included in

Accounting Commons