Description

Amid the rising concern of the reliability of the auditor's report to shareholders' investment decisions in the country, it becomes imperative to consider the kind of relationship that exists. Shareholders represent the owner of the business and because they are divorced from the day to day activities of the business, there is a need for an independent auditor to help certify the financial statement prepared by the management. Shareholders rely on auditor's report and so the possibility of relying on it despite previous compromises on the part of the auditor is needed to be established. Specifically, we set out to investigate the relationship between the auditor's report and the shareholders' investment decision. We make use of correlation coefficient to establish the relationship and in the finding we discover that a positive relationship exists but weak and mild. We therefore recommend that the contents of the report be improved upon and peer review of audited reports should be encouraged to enable shareholders place reliance on the report. This work will be of immense benefits to the investment analysts, shareholders and the regulatory authorities.