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Article

Do Investors’ Tolerance for Ambiguity and Auditors’ Associations with Clients Who Have Had Restatements and Regulatory Enforcement Actions Impact Investing Decisions?

by
Arnold Schneider
Scheller College of Business, 800 W. Peachtree St., Georgia Institute of Technology, Atlanta, GA 30308, USA
Account. Audit. 2025, 1(3), 10; https://doi.org/10.3390/accountaudit1030010
Submission received: 29 July 2025 / Revised: 15 September 2025 / Accepted: 30 September 2025 / Published: 2 October 2025
Versions Notes

Abstract

This research examines investing decisions when the company under consideration has an auditor with other clients who have had financial statement restatements and regulatory enforcement actions. Another issue addressed is whether investors’ tolerance for ambiguity affects these investing decisions. Participants were given a questionnaire involving an investment decision and were asked to provide risk assessments and investment amounts. They were assigned to one of two treatment groups, each of which described the same hypothetical company scenario except for its audit firm’s associations with other clients. One group was informed that the company’s auditor has had other clients who have recently had financial statement restatements and regulatory enforcement actions. The other group was informed that the company’s auditor has not recently had any clients who have had financial statement restatements or regulatory enforcement actions. Participants’ tolerance for ambiguity was measured with a commonly used metric. Results indicate that knowledge about an audit firm’s associations with other clients did not significantly impact either investors’ risk assessments (5.76 vs. 6.17 on a scale from 1 to 10) or investment amounts ($4917 vs. $4227). This research also did not find evidence that participants’ tolerance for ambiguity influences risk assessments (6.20 vs. 5.72 on a scale from 1 to 10) or investment amounts ($4857 vs. $4309).

1. Introduction

Investors rely on financial statement information in making decisions about investing in companies. Reliable financial statements should lead investors to place more trust in the financial information provided by the company. This trust should reduce investors’ perceived risk of investing in the company, thereby resulting in a greater chance of deciding to invest in the company.
Financial statement reliability is enhanced when audited by an independent public accounting firm. Such audits, in fact, are required for the annual financial statements of publicly traded companies. The degree to which audits lend credibility to companies’ financial statements may depend on the reputation of the audit firm. Prior research has shown that financial statement user decisions are impacted by audit firm reputation [1,2,3].
An audit firm’s reputation might be tarnished if it has clients who have experienced financial statement restatements or regulatory enforcement actions. These occurrences may lead people to believe that had the audit been conducted properly, the restatements or enforcement actions could have been avoided. This study investigates whether investment in a company is negatively impacted by having an audit firm with a history of associations with clients who have experienced financial statement restatements and regulatory enforcement actions (hereafter, referred to as “negative past associations”). This issue is important for at least two reasons. First, companies would benefit from a better understanding of how their auditor’s negative past associations impact decisions to invest in their companies. Second, audit firms should be aware of how their negative past associations might influence decisions to invest in their other clients.
Research by Schneider [4] finds that lending decisions are adversely impacted when a borrower’s audit firm has a negative history of associations with past borrowers. This research extends Schneider [4] by examining investing decisions when the company under consideration has an auditor with other clients who have had financial statement restatements and regulatory enforcement actions.
Another research issue in this study is whether investors’ tolerance for ambiguity affects their investing decisions. Tolerance for ambiguity is a personality characteristic pertaining to feeling threatened by ambiguous information [5]. Ambiguity may have one or more of the following connotations: state of mind uncertainty; information vagueness; stimulus having more than one meaning; contradictions and inconsistencies [6]. People who have a low tolerance for ambiguity experience stress, react prematurely, and tend to avoid ambiguous situations, while people who have a high tolerance for ambiguity perceive ambiguous situations as interesting and challenging [7].
An ambiguous situation is posed when an investor learns that a company under consideration has an auditor with negative past associations. That is, it is unclear to what extent, if any, the audit firm contributed to its clients’ need to restate financial statements or having been punished with enforcement actions. This study examines whether investors who have a low tolerance for ambiguity make investing decisions that differ from those who have a high tolerance for ambiguity.
This research uses a behavioral experiment to investigate the effects of negative past associations and tolerance for ambiguity on investing decisions. An experimental methodology enables one to control the information available to investors. The experiment can control for potentially confounding factors like concurrent information disclosure, firm-specific characteristics, and self-selection, which are problematic in archival investment studies.
Participants in the experiment were given a questionnaire involving an investment decision and were asked to provide risk assessments and investment amounts. Their tolerance for ambiguity was measured with a commonly used metric. The study hypothesizes that risk assessments would be higher and amounts invested would be lower when a company has an audit firm with negative past associations. A second hypothesis is that assessments of risk by investors having a low tolerance for ambiguity would be different than for investors having a high tolerance for ambiguity. Results indicate that knowledge about an audit firm’s associations with other clients did not significantly impact either investors’ risk assessments or investment amounts. The study also did not find evidence that participants’ tolerance for ambiguity influences investing judgments. A practical implication of these findings is that companies might not need to be concerned that their audit firm’s past negative associations would adversely impact their chances of obtaining investments. Additionally, audit firms could benefit from knowing that their ability to obtain/retain clients might not be adversely impacted by these clients learning of the audit firm’s negative past associations.

2. Literature Review and Hypothesis Development

2.1. Auditor Reputation

Several accounting studies have addressed auditor reputation issues. Findings from Mayhew [8] indicate that when audit firms have reputations for high quality audits, they continue to provide a high degree of audit effort in order to maintain their reputations for high audit quality. Miller and Smith [1] find that the reputation of a loan applicant’s auditor had no effect on the lending decision. On the other hand, some studies have found that an audit firm’s reputation can have real economic consequences to that firm. Palmrose [9] and Francis and Wilson [10] both show that auditors having reputations for providing high-quality service obtain higher audit fees than auditors not having such reputations. Wilson and Grimlund [11] find that a reputation loss to an audit firm caused by a disciplinary action from the Securities and Exchange Commission (SEC) leads to a decline in the audit firm’s market share and greater difficulty in retaining existing clients. Furthermore, Davis and Simon [12] demonstrate that the harm to an auditors’ reputation caused by an SEC disciplinary action results in a decrease in future audit revenues. Cook, Kowaleski, Minnis, Sutherland, and Zehms [13] find that auditors adjust their client portfolios when presented with new information about client misconduct, and those having the most significant reputation concerns are least likely to deal with high misconduct clients.
Several studies have investigated the impact of negative past associations of audit firms on financial statement user decisions. In a commercial lending setting, Bird, Karolyi, and Ruchti [14] show that when borrowers in their loan portfolio restate financial statements or have been subject to accounting and auditing enforcement releases, banks shift their loan portfolio away from the CPA firm that serviced these borrowers. In another lending study, Schneider [4] also shows that risk assessments and lending decisions are adversely impacted when a borrower’s audit firm has a negative history of associations with past borrowers. Chi, Lisic, Myers, Pevzner, and Seidel [2] investigate whether audit firm engagement partners who have recently been associated with clients’ restatements of financial statements experience increased audit fee pressures from their non-restating clients. Findings indicate that audit fees are lower among non-restating companies whose audit engagement partner had been recently associated with another client’s restatement. Lambert, Luippold, and Stefaniak [15] examine the effects of financial statement restatements in an investment setting. They find that investors are less likely to invest in a firm when it is linked to a restating firm via an audit partner than when it is linked only by an audit firm. That study, however, does not address the impact of an association to a restating firm versus no association to any restating firms. The current study focuses on this issue by comparing investment decisions under conditions where there is a negative past association with the firm’s auditor (i.e., clients who have experienced financial statement restatements and regulatory enforcement actions) in contrast to the condition where there are no negative past associations with the firm’s auditor.

2.2. Tolerance for Ambiguity

Tolerance for ambiguity is a personality characteristic that has been examined in various different accounting settings. Studies by Oliver and Flamholtz [16], Gul [17], Chong [18], Hartmann [19], Weisbrod [20], Ylinen and Gullkvist [21], and van Beest and Pinsker [22] have examined tolerance for ambiguity in contexts involving financial reporting, human resource accounting, and management accounting. In a study focusing on investment decisions based on accounting information, McGhee, Shields, and Birnberg [23] did not find support for their hypothesis that investors who are intolerant of ambiguity would be less confident in their decisions and seek more information to reduce the level of ambiguity than investors who are tolerant of ambiguity.
Several studies have addressed tolerance for ambiguity in the context of various auditing issues. Pincus [24] shows that auditors having a low tolerance for ambiguity are more likely to assess correctly an account as being not fairly presented than auditors having a high tolerance for ambiguity. Vaassen, Baker and Hayes [25] find that auditors having a lower tolerance for ambiguity access more financial information. Chand, Leung, Martinov-Bennie, and Carey [26] demonstrate that auditors who are more tolerant of ambiguity are likely to select the accounting treatment that best reflects the economic substance of a transaction when interpreting international financial reporting standards compared to auditors who are less tolerant of ambiguity.
A number of auditing studies have examined tolerance for ambiguity in the context of lending decisions. Gul [27] demonstrates that for qualified audit opinions, bankers who have a low tolerance for ambiguity are less confident than those who have a high tolerance for ambiguity. For unqualified audit opinions, though, there is no difference in confidence levels. Tsui [28] focuses on “subject to” audit opinions due to uncertainty about pending litigation and finds that bankers having a low tolerance for ambiguity require larger interest rate premiums than those having a high tolerance for ambiguity. Wright and Davidson [29] examine the effects of tolerance for ambiguity and level of auditor attestation—audit, review, or no auditor association with financial statements—on commercial lending decisions. Findings indicate that ratings of loan riskiness by loan officers are affected by their tolerance for ambiguity, but not by the level of auditor attestation. In a study involving internal control disclosures, Schneider [30] finds that loan officers having a high tolerance for ambiguity had an average loan approval probability that was lower than loan officers having a low tolerance for ambiguity. Schneider [31] did not find evidence that lenders’ tolerance for ambiguity influences lending judgments in settings involving critical audit matters.
The current study involves the examination of tolerance for ambiguity in an auditing context not previously addressed in any prior research. Specifically, this study focuses on investing decisions when the company under consideration has an auditor with other clients who have had financial statement restatements and regulatory enforcement actions.

2.3. Hypotheses

Audit firms are likely to benefit by having prestigious clients with good reputations [32], and conversely, may be harmed by associations with clients that have poor reputations [33]. An audit firm’s reputation can be adversely impacted by its associations with clients who have experienced financial statement restatements or regulatory enforcement actions. Financial statement restatements and regulatory enforcement actions are often used to assess audit quality [34], and accordingly, auditor reputation [35]. Rajgopal, Srinivasan, and Zheng [36] study audit quality proxies and find that restatements consistently predict all of the top six most cited audit deficiencies. Irani, Tate, and Xu [37] show that audit firms’ reputations are harmed when they have been associated with clients whose financial statements have been restated. On the other hand, McCoy, Meeks, and Marley [38] demonstrate that when external auditors initiate restatements, public trust in the company’s auditor remains high (more so than for regulator-initiated restatements), despite the adverse market reactions associated with the restatements.
Motivated reasoning theory [39] suggests that rather than blaming themselves for poor decisions after investing in companies that have had restatements or regulatory enforcement actions, investors may in part attribute these restatements or regulatory enforcement actions to poorly audited financial statements, thus reflecting negatively on the audit firm. In a commercial lending study, Bird, Karolyi, and Ruchti [14] provide evidence that loan officers’ preferences for auditors are adversely affected when the auditors have clients who have had restatements and regulatory enforcement actions. These arguments lead to the following hypotheses:
H1a: 
Risk assessments for investments will be higher when a company has an audit firm with a history of associations with clients who have experienced financial statement restatements and who have been subject to regulatory enforcement actions.
H1b: 
Amounts invested will be lower when a company has an audit firm with a history of associations with clients who have experienced financial statement restatements and who have been subject to regulatory enforcement actions.
Some degree of ambiguity is conveyed to investors when they learn that a company under consideration for an investment has an auditor with negative past associations. In particular, the ambiguity relates to the extent, if any, that the audit firm contributed to its clients’ need for restating financial statements or for having been penalized with enforcement actions. Investors who have a low tolerance for ambiguity might be expected to react more negatively in this type of investing scenario than do investors who have a high tolerance for ambiguity. Hence, a lower tolerance for ambiguity would suggest higher risk assessments for the investment, and in turn, lower amounts invested. Prior psychology research by Furnham and Marks [40] supports this with evidence that low tolerance for ambiguity is associated with risk aversion.
However, Furnham and Marks [40] also find that those who are intolerant of ambiguity tend to be overconfident in their judgments. Overconfidence by investors may lead to less careful analysis of the information provided and, in turn, a lower chance of detecting anomalies that would question the advisability of investing. This argument suggests that low tolerance for ambiguity would lead to lower risk assessments and higher amounts invested. Moreover, people with low tolerance for ambiguity tend to look for information that supports their preconceptions, whereas those with high tolerance for ambiguity tend to seek out objective information that can potentially disconfirm their prior beliefs [41]. So, investors with a high tolerance for ambiguity may tend to process the information provided more carefully. This greater scrutinization may better enable them to detect anomalies, leading to higher risk assessments and lower amounts invested.
Because of the competing arguments above, the following hypotheses are non-directional:
H2a: 
Assessments of risk by investors having a low tolerance for ambiguity will be different than for investors having a high tolerance for ambiguity.
H2b: 
Amounts invested by investors having a low tolerance for ambiguity will be different than for investors having a high tolerance for ambiguity.

3. Experimental Design

The research participants were given a case scenario involving an investing decision pertaining to a hypothetical company. The case provided background information about the company, three years of financial data, and monthly stock price data for the past year. The case also stated that the company’s financial statements were audited by a national, non-Big Four CPA firm, and that a clean (i.e., unqualified) audit opinion had been issued.
Participants first rated the level of risk associated with investing in the common stock of the company using a 10-point scale ranging from not risky at all to very risky. Next, they were asked to allocate $10,000 between investing in the common stock of the company versus a relatively risk-free money market account. Afterwards, the participants rated the importance of various factors in making their investing decisions. Lastly, they provided responses to some demographic questions and then answered questions relating to the assessment of their tolerance for ambiguity. The tolerance for ambiguity was measured using the AT-20 scale developed by MacDonald [42]. (The AT-20 scale ranges from 1 to 20. The median value for participants in this study is 9.0 and the range is 2 to 19.) Consistent with previous studies (e.g., [17,29,30]), a median split categorized participants into two groups—high tolerance for ambiguity or low tolerance for ambiguity.
Participants were assigned to one of two treatment groups, each of which described the same hypothetical company scenario except for its audit firm’s associations with other clients. One group, hereafter designated as the Negative Past Association (NPA) group, was informed that the company’s auditor has had other clients who have recently had financial statement restatements and regulatory enforcement actions. The other group, hereafter designated as the Positive Past Association (PPA) group, was informed that the company’s auditor has not recently had any clients who have had financial statement restatements or regulatory enforcement actions. The questionnaire was pre-tested with three accounting instructors and minor wording changes were made as the result of their comments.

4. Participants and Demographics

Participants for this study were obtained through chapters of Institute of Management Accountants, Financial Executives Networking Group, and Association of Government Accountants located throughout the United States. Members of these organizations are generally knowledgeable about audited financial statements and would also have some awareness about issues involving financial statement restatements and regulatory enforcement actions. Some participants were obtained by sending emails to email addresses found on chapter websites. Most, however, were obtained at local chapter meetings. Completed questionnaires were received from 70 individuals.
The participants’ average age is 48.6 years, 58.6 percent are male, and 58.6 percent have masters degrees (indeed, 41 out of 70 are male and 41 out of 70 have masters degrees). They average 24.3 years of full-time work experience and 87.1 percent list accounting/finance as the job category describing their most recent full-time position. The vast majority of these participants are experienced investors, with 81.4 percent indicating that they have previously purchased or sold stock relating to personal investments. All in all, it would appear that these individuals are appropriate for participation in this study.
The distribution of participants into the four group cells created by the two past association treatments and the two tolerance for ambiguity groups is shown in Table 1. Statistical test results indicate no significant differences in demographics across the four group cells.

5. Analyses and Findings

The average risk assessment (1 = not risky at all; 10 = very risky) for all participant investors was 5.96 and the averages for the four groups ranged from 5.65 to 6.50, as shown in Table 1, Panel A. The average investment amount was $4587 and the averages for the four groups ranged from $3333 to $5079, as shown in Table 2, Panel A.
As a manipulation check for the treatment variable, participants were asked about their confidence in the CPA firm used by the hypothetical company to audit its financial statements. Their ratings were on a scale of 1 = very low to 5 = very high. The average rating for the PPA group is 3.64, while the average rating for the NPA group is 3.17. This difference is in the appropriate direction and is statistically significant (t = 2.52; p = 0.01). This confirms a successful manipulation of the treatment variable, although the practical significance of the mean difference is modest.
A 2 × 2 MANOVA indicates that the differences among risk assessments and amounts invested are not statistically significant across the two treatment groups (Pillai’s Trace = 0.43; p = 0.27) and also not statistically significant across the two levels of tolerance for ambiguity (Pillai’s Trace = 0.34; p = 0.36). Participants in the PPA treatment group have a combined average risk assessment of 5.76, while those in the NPA treatment have a combined average risk assessment of 6.17. This result is in the expected direction as hypothesized in H1a, but the difference is not statistically significant (p = 0.16), as shown in the ANOVA results found in Panel B of Table 1. Participants in the PPA treatment group have a combined average investment amount of $4917, while those in the NPA treatment condition have a combined average investment amount of $4227. Again, this result is in the expected direction as hypothesized in H1b, but is not statistically significant (p = 0.15), as shown in Panel B of Table 2. Hence, there is not enough evidence to support any effect of an audit firm’s associations with other clients on either investors’ risk assessments or amounts invested.
Participants with a high tolerance for ambiguity have a combined average risk assessment of 6.20, while those with a low tolerance for ambiguity have a combined average risk assessment of 5.72. This difference is not statistically significant (p = 0.23), as shown in the ANOVA results found in Panel B of Table 1. Participants with a high tolerance for ambiguity have a combined average investment amount of $4857, while those who have a low tolerance for ambiguity have a combined average investment amount of $4309. This difference is not statistically significant (p = 0.37), as shown in Panel B of Table 2. Thus, it cannot be concluded that risk assessments or investment amounts differ between those who have a low tolerance for ambiguity versus those with a high tolerance for ambiguity.
For each of the two dependent variables, ANCOVAs were also conducted with amount of work experience, age, education, and sex as covariates and the results are essentially the same. Consequently, neither the MANOVA, ANOVAs, nor ANCOVAs provide support for either of the two sets of hypotheses.
After demographic information was obtained, participants provided ratings on the importance of seven factors in making their investment decisions (1 = no importance; 10 = very important), as shown in Table 3. The most important factor was the financial data about the hypothetical company, with an average rating of 8.75. Only the rating for the SIC classification is below the scale midpoint of 5.5 and ratings for all six other factors are above the scale midpoint. However, only the 5.87 rating for the audit firm’s past associations does not statistically significantly differ from the scale midpoint. Furthermore, it has the next to lowest importance rating. This corroborates the finding that neither investors’ risk assessments nor investment amounts appear to be influenced by knowledge about an audit firm’s past associations with other clients.

6. Discussion

This study’s results regarding negative past associations appear to be consistent with the findings of Lambert, Luippold, and Stefaniak [15], who demonstrated that investors are less likely to invest in a firm when it is linked to a restating firm via an audit partner than when it is linked only by an audit firm. The linkage in the current study was portrayed as being through the audit firm rather than the audit partner. So, both of these studies find little or no impact on investing in a company when its audit firm has negative past associations with other companies. It should be noted, though, that the effect sizes align with the hypothesized directions, indicating the potential existence of effects that may have been statistically undetected. Therefore, further research is necessary to make more definitive conclusions about the effects of negative past associations.
The findings in this study that tolerance for ambiguity did not appear to influence investing decisions are consistent with results from some accounting studies, which also found that tolerance for ambiguity did not impact judgments (e.g., [23,29,31]). In contrast, other accounting studies have found that tolerance for ambiguity does influence judgments (e.g., [24,26,30]). Further research is necessary to reconcile these differing findings about the effects of tolerance for ambiguity in accounting settings.

7. Conclusions

The purpose of this study is to examine investing decisions when the company under consideration has an auditor with negative past associations. Another issue addressed is whether investors’ tolerance for ambiguity affects these investing decisions. The study hypothesizes that risk assessments would be higher and amounts invested would be lower when a company has an audit firm with negative past associations. Another hypothesis is that assessments of risk by investors having a low tolerance for ambiguity would be different than for investors having a high tolerance for ambiguity. Neither of these hypotheses was supported by the evidence obtained in this study’s experiment.
This study does not provide the support to conclude that knowledge about an audit firm’s associations with other clients who have had restatements and regulatory enforcement actions impact investors’ risk assessments or investment amounts. Hence, companies might not need to be concerned that their audit firm’s associations with other clients would adversely impact their chances of obtaining investments. Additionally, audit firms could benefit from knowing that their ability to obtain/retain clients might not be adversely impacted by these clients learning of the audit firm’s negative past associations. The audit firms could persuade these clients or potential clients that investment in the clients would not be negatively affected by the audit firm’s past associations.
This study also does not produce conclusive evidence that investors’ tolerance for ambiguity affects investing judgments. An implication of this finding is that both the audit firm and its client need not be concerned about the ambiguity of whether the audit firm had some degree of responsibility for the occurrence of restatements or regulatory enforcement actions. Notably, even if investors have a low tolerance for ambiguity, their likelihood of investing in the client appears to not be different from those having a high tolerance for ambiguity.
The usual limitations of experimental studies apply to this study as well. One limitation is that this research was conducted in the context of one company setting only and cannot necessarily be generalized to other types of company settings. Therefore, future studies should investigate issues involving past auditor associations and tolerance for ambiguity with company scenarios having different characteristics regarding industry, competitive environment, risk, financial performance, and historical stock prices. A second limitation is that investors can usually obtain more information about a company under consideration than was provided in the current study’s questionnaire. A third limitation is that economic consequences such as suffering financial losses from poor investing decisions were not inherent in this experiment. Participants did not have any real money of their own at stake in this study’s experiment. Future research can investigate investing decisions in experimental market settings where compensation to investors would depend on the outcomes of their investing decisions. Another limitation relates to the relatively small sample size in this study. It is possible that the null results obtained may reflect insufficient power rather than the absence of significant effects. Future research can address this issue by incorporating larger sample sizes. Hence, while statistical significance was not achieved, the direction of results may still hold practical relevance and could serve as a guiding principle for future research.
Future research can also address whether this study’s findings, which pertain to individual investors, would also apply to settings involving institutional investors. While this study focuses on negative past associations of the audit firm, future research could investigate whether similar results would be obtained when examining negative past associations of an audit partner rather than focusing on the firm. Another avenue for future research would be to address whether the recency of negative past associations impacts investing decisions.

Funding

This research received no external funding.

Institutional Review Board Statement

Ethical review and approval were waived for this study by the Georgia Tech Institutional Review Board because minimal risk research qualified for exemption status under 45 CFR 46 104d.3c Limited IRB Review.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available by the authors on request.

Acknowledgments

I gratefully acknowledge the research assistance of Peina Liu.

Conflicts of Interest

The authors declare no conflicts of interest.

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Table 1. Risk Assessment.
Table 1. Risk Assessment.
Panel A: Mean Risk Assessment
Tolerance for Ambiguity
Audit Firm Past AssociationHigh Low Total
Positive Past Association 5.88 (n = 17) 5.65 (n = 19) 5.76 (n = 36)
Negative Past Association6.50 (n = 18) 5.80 (n = 16) 6.17 (n = 34)
Total 6.20 (n = 35) 5.72 (n = 35) 5.96 (n = 70)
Panel B: Audit Firm Past Association (PPA vs. NPA) and Tolerance for Ambiguity (High vs. Low)
Mean SquareF-statistic p-value *
Audit Firm Past Association 2.45 1.050.16
Tolerance for Ambiguity 3.491.49 0.23
Interaction 0.900.39 0.54
* p-values are one-tailed for Audit Firm Past Association and two-tailed for Tolerance for Ambiguity as well as for the interaction.
Table 2. Investment Amount.
Table 2. Investment Amount.
Panel A: Mean Investment Amount
Tolerance for Ambiguity
Audit Firm Past AssociationHighLowTotal
Positive Past Association$4735 (n = 17)$5079 (n = 19)$4917 (n = 36)
Negative Past Association$4972 (n = 18)$3333 (n = 16)$4227 (n = 34)
Total$4857 (n = 35)$4309 (n = 35)$4587 (n = 70)
Panel B: Audit Firm Past Association (PPA vs. NPA) and Tolerance for Ambiguity (High vs. Low)
Mean SquareF-statisticp-value *
Audit Firm Past Association9,740,496.571.120.15
Tolerance for Ambiguity7,179,281.590.820.37
Interaction16,820,088.311.930.17
* p-values are one-tailed for Audit Firm Past Association and two-tailed for Tolerance for Ambiguity as well as for the interaction.
Table 3. Ratings of Factor Importance.
Table 3. Ratings of Factor Importance.
FactorAvg. Ratingt-Statistic
Financial data8.7516.86 *
Auditor’s opinion on financial statements7.597.19 *
Historical stock prices7.246.36 *
Company description6.733.81 *
Analyst recommendation6.563.99 *
Audit firm’s past associations5.871.04
SIC classification4.51−3.21 *
Rating scale: 1 = no importance; 10 = very important. * Indicates significance at the 0.05 level for a test of the difference between the average rating and the scale midpoint of 5.5.
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Schneider, A. Do Investors’ Tolerance for Ambiguity and Auditors’ Associations with Clients Who Have Had Restatements and Regulatory Enforcement Actions Impact Investing Decisions? Account. Audit. 2025, 1, 10. https://doi.org/10.3390/accountaudit1030010

AMA Style

Schneider A. Do Investors’ Tolerance for Ambiguity and Auditors’ Associations with Clients Who Have Had Restatements and Regulatory Enforcement Actions Impact Investing Decisions? Accounting and Auditing. 2025; 1(3):10. https://doi.org/10.3390/accountaudit1030010

Chicago/Turabian Style

Schneider, Arnold. 2025. "Do Investors’ Tolerance for Ambiguity and Auditors’ Associations with Clients Who Have Had Restatements and Regulatory Enforcement Actions Impact Investing Decisions?" Accounting and Auditing 1, no. 3: 10. https://doi.org/10.3390/accountaudit1030010

APA Style

Schneider, A. (2025). Do Investors’ Tolerance for Ambiguity and Auditors’ Associations with Clients Who Have Had Restatements and Regulatory Enforcement Actions Impact Investing Decisions? Accounting and Auditing, 1(3), 10. https://doi.org/10.3390/accountaudit1030010

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