Does industry specialist assurance of non-financial information matter to investors?

Ferguson, A; Pündrich, G

Does industry specialist assurance of non-financial information matter to investors?

Ferguson, A

Pündrich, G

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Publication Type:: Journal Article
Citation:: Auditing, 2015, 34 (2), pp. 121 - 146
Issue Date:: 2015-01-01

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Field	Value	Language
dc.contributor.author	Ferguson, A https://orcid.org/0000-0003-0535-0643	en_US
dc.contributor.author	Pündrich, G	en_US
dc.date.issued	2015-01-01	en_US
dc.identifier.citation	Auditing, 2015, 34 (2), pp. 121 - 146	en_US
dc.identifier.issn	0278-0380	en_US
dc.identifier.uri	http://hdl.handle.net/10453/121947
dc.description.abstract	© 2015, American Accounting Association. All rights reserved. Previous studies in the financial economics literature highlight the value of non-financial information in Internet and telephony stocks (Amir and Lev 1996; Trueman, Wong, and Zhang 2001). Other studies consider the financial and share price performance implications of assurance of non-financial information such as ISO 9000 certification (Corbett, Montes-Sancho, and Kirsch 2005), Total Quality Management awards (Hendricks and Singhal 1997), and non-financial information disclosure (Coram, Monroe, and Woodliff 2009). However, prior studies have occurred in settings where disclosure and assurance of non-financial information is voluntary. We provide evidence on the value of assurance of non-financial information where the assurance of public resource disclosures made under the JORC Code by Australian Mining Development Stage Entities are mandatory. The assurance role undertaken by Competent Persons reporting under the JORC Code bears many close similarities to the financial reporting assurance role undertaken by auditors. Further, the information environment of MDSEs is characterized by high information asymmetry and the reality that the utility of nonfinancial technical information supersedes financial statement information in firm valuation. We document very weak evidence of greater abnormal returns evident when reserve disclosures are provided by specialist mining consultants. In supplementary analysis, we test for implications of switching mineral consultant and find that clients experience significant positive abnormal returns when the successor is larger. Overall, our findings support the insurance hypothesis, in that mandatory specialist assurance matters little where litigation risk is low.	en_US
dc.relation.ispartof	Auditing	en_US
dc.relation.isbasedon	10.2308/ajpt-50930	en_US
dc.subject.classification	Accounting	en_US
dc.title	Does industry specialist assurance of non-financial information matter to investors?	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	34	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	34	en_US

Abstract:

© 2015, American Accounting Association. All rights reserved. Previous studies in the financial economics literature highlight the value of non-financial information in Internet and telephony stocks (Amir and Lev 1996; Trueman, Wong, and Zhang 2001). Other studies consider the financial and share price performance implications of assurance of non-financial information such as ISO 9000 certification (Corbett, Montes-Sancho, and Kirsch 2005), Total Quality Management awards (Hendricks and Singhal 1997), and non-financial information disclosure (Coram, Monroe, and Woodliff 2009). However, prior studies have occurred in settings where disclosure and assurance of non-financial information is voluntary. We provide evidence on the value of assurance of non-financial information where the assurance of public resource disclosures made under the JORC Code by Australian Mining Development Stage Entities are mandatory. The assurance role undertaken by Competent Persons reporting under the JORC Code bears many close similarities to the financial reporting assurance role undertaken by auditors. Further, the information environment of MDSEs is characterized by high information asymmetry and the reality that the utility of nonfinancial technical information supersedes financial statement information in firm valuation. We document very weak evidence of greater abnormal returns evident when reserve disclosures are provided by specialist mining consultants. In supplementary analysis, we test for implications of switching mineral consultant and find that clients experience significant positive abnormal returns when the successor is larger. Overall, our findings support the insurance hypothesis, in that mandatory specialist assurance matters little where litigation risk is low.

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http://hdl.handle.net/10453/121947