The Effect of Auditor’s Assurance on Intellectual Capital (IC) Disclosure on Investors’ Judgements An Experimental Study

The research aimed to test the effect of the auditor’s assurance on intellectual capital (IC) statements and opinion alternatives on investors’ judgements that include; their expectation about stock price and investment decision. The researcher used an online experimental study on Egyptian financial analysts and investment managers. Many results have been obtained; First, the participants highly valuate the IC statements, and they think that it presents useful and reliable information for the investment decision purpose. Second, the participants think that the assurance service on such information of IC can increase their creditability and reliability of this information. Third, there is a significant effect of the auditor assurance report on the participants’ judgements about stock price and investment decision. Finally, alternatives of the assurance opinion (conclusion) have significant effect on the investors’ judgements, as the report with unmodified opinion leads to increase the estimated stock price and has positive effect on the investment decision comparing with declaration of unaudited IC reports. While, the qualified opinion report leads to decrease the estimated stock price and has a negative effect on the investment in the company stock comparing with unaudited IC reports. Despite that, the effect of the qualified opinion is more significant than the unmodified opinion. The study also tested the effect of investor’s experience level and scientific qualifications on the relationship between assurance report of IC and investors judgements.The results show that, both experience and qualifications have significant effects on the investors’ judgements related to estimating stock price and investment decision, especially in the case of assurance report with unmodified opinion. However, this result was less noticeable in the case of assurance reports with qualified opinion.This result can be explained depending on Pei and Hamill (2013) results, which stated that the modified opinion has higher information content to all investors (Professional and less nonprofessional), so this type of opinion will affect the judgements of both types of investors, therefore no significant differences between their decisions will be found.