Introduction:*

Financial reporting quality can benefit from companies and auditors using artificial intelligence (AI) in complex and subjective financial reporting areas. However, benefits will only accrue if managers incorporate AI-based information into their financial reporting decisions, which the popular press and academic literature suggest is uncertain. We use a multi-method approach to examine how financial executives view and respond to AI. In a survey, respondents describe various uses of AI at their companies, spanning from simple to complex functions. While managers view AI use by their companies relatively positively, they appear to be uncertain about how auditors’ use of AI will directly benefit their companies. In an experiment, managers whose companies use AI record larger audit adjustments for a complex accounting estimate when the auditor uses AI versus does not use AI. Auditor AI use does not affect managers’ adjustment decisions in the absence of company AI. This study highlights the importance of considering the effects of AI use by both companies and their auditors when evaluating how AI influences auditing and financial reporting.

*Co-authored with E.E. Griffith (University of Wisconsin-Madison) and N.L. MacKenzie (Georgia Institute of Technology)

General information:

Attendance to this hybrid seminar is possible by invitation only. Please send an e-mail to secbs-abs@uva.nl if your are interested in attending this seminar.