AI Summary

Auditors are more likely to view corporate leaders’ misconduct as material when they adopt an investor’s perspective, a new study by Poole shows. The research finds that auditors normally judge executive lapses as less material to their firms’ financial performance. This discrepancy highlights an “expectation gap” between auditors’ professional definitions and the public’s assumptions, according to co‑author Eileen Taylor. Under PCAOB standards, information is material if it has a substantial likelihood of significantly altering the total mix of information available to a reasonable investor.

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