Abstract
This thesis investigates the effectiveness of communication between assurors and
assurance report users, and the role that assurance reports play in this process. It
comprises two behavioural experiments undertaken in the context of: (i) wording
changes to the audit report (developed product) using shareholders as
participants; and (ii) the role of assurance and type of assurance provider for
corporate social responsibility reporting (evolving product), using financial
analysts as participants. In both studies effectiveness of communication is
examined in terms of report users’ perceptions and investment decision-making.
The theoretical framework used in these studies is adapted from a
communications model developed by Shannon and Weaver (1949), and
supplemented by psychology research focused on source credibility (Birnbaum
and Stegner, 1979). Two key elements of the communication process are
recognised; the: (i) message transmitted; and (ii) source of the message. The
first element is considered in the first experiment; the second element in the
second study.
Useful feedback is provided to standard-setters. From the first study, report
users’ perceptions are not impacted by changes to the wording of the audit
report. However, in the second experiment they are affected by differences in
the source of the message. In terms of trustworthiness, financial analysts
perceive the credibility of the source of corporate social responsibility
information to be significantly greater when assured. For a company in an
industry with stronger incentives to report positive corporate social responsibility
information, they perceive the credibility (trustworthiness, overall credibility) of
the source of the information to be significantly greater when assured. They also
discern differences between types of assuror whereby the credibility
(trustworthiness, expertise, overall credibility) of the source of information is
perceived to be greater when assured by a professional accountant than a
sustainability expert.
A contribution of these experiments is the analysis of report users’ investment
decision-making, as well as their perceptions. Differences in the message and
source of the message for assurance reporting have no impact on report users’
investment decisions. Differences in characteristics of report users (familiarity
with reports, extent to which reports are understandable) appear to impact report
users’ perceptions and merits further examination.