Non-professional investors’ perspective on commercialism in auditing: An experimental study

Abstract The current study investigates how non-professional investors assess auditor independence based on two key factors: auditor commercialism (high vs. low) and the disclosures of sanctions against auditors (disclosure vs. non-disclosure). Using a 2 × 2 between-participants experiment design, we investigate how these variables influence the perceived auditor independence of non-professional investors. The findings indicate that higher commercialism has a negative impact on investors’ perceived auditor independence. Interestingly, our findings also suggest that the disclosure of sanctions against auditors continues to impair perceptions of independence. However, when such disclosures occur in a highly commercial context, they appear to help restore investor trust. In these cases, perceived auditor independence improves significantly, underscoring the role of disclosures against auditors in mitigating the negative effects of commercialism. Our findings have important implications for the investors, regulators, listed firms, and the auditors.