Evaluating the Relationship Between Auditor Communication and Stakeholder Perception of Financial Integrity

Posted: Jul 28, 2015

• Jason Palmer
• Eliana Barnes
• Brooks Kennedy

Abstract

The integrity of financial reporting represents a cornerstone of capital market efficiency and corporate governance. While extensive research has examined technical aspects of audit quality and financial disclosure, the communicative dimension of auditing remains comparatively underexplored. This study addresses this gap by investigating how auditor communication patterns influence stakeholder perceptions of financial integrity, independent of the underlying financial reality. The conventional audit paradigm has predominantly emphasized technical compliance and procedural rigor, often treating communication as a secondary consideration. However, emerging evidence suggests that stakeholders' trust in financial information is shaped not only by the accuracy of reported numbers but also by the manner in which this information is communicated. Our research is motivated by several critical observations from both academic literature and practical experience. First, we note that companies with similar financial performance and audit quality often experience markedly different levels of stakeholder confidence. Second, communication breakdowns between