I investigate the stock market's reaction to events related to the Public Company Accounting Oversight Board's (PCAOB) development and enactment of Auditing Standard No. 5 (AS 5). The change from Auditing Standard No. 2 (AS 2) to AS 5 was debated in the business press at length. The PCAOB stated that the goal of AS 5 was to reduce the prohibitive costs of the Sarbanes-Oxley Act of 2002 - Section 404 and AS 2 (Krishnan et al. 2008) while maintaining the effectiveness of the internal control audits required by those policies. However, there was concern that internal control audit quality would decrease under AS 5. My study examines how investors perceived this change by considering stock market reaction around 10 event dates related to PCAOB and Securities and Exchange Commission (SEC) actions with regard to the development and enactment of AS 5. I find evidence that the market's reaction to key AS 5 events was significantly negative, which is consistent with investors perceiving AS 5 as a significant decrease in internal control audit quality. I also study these investor reactions cross-sectionally to further examine the two potential effects of AS 5 (decrease in compliance costs and decrease in internal control audit quality) and how they relate to firm characteristics (size, complexity, litigation risk, and fraud risk). I find evidence consistent with my main finding: investors' perceived increase in information risk under AS 5 is apparent when considering firm characteristics. Finally, I consider ex-post financial reporting quality under AS 5 and find no significant change in financial reporting quality compared to under AS 2. This study contributes to accounting research by being the first to study the stock market's perception of this significant policy change archivally and the first to consider the effectiveness of AS 5 with regard to financial reporting quality.

Slopandet av revisionsplikten har lett till att små bolag står mellan valet att anlita revisor eller inte. Studiens syfte har varit att utforska hur den upplevda nyttan med revision påverkar valet att anlita revisor eller inte för etablerade och nyetablerade bolag. Undersökningen genomfördes genom en kvalitativ undersökningsmetod vars syfte var att få en djupgående förståelse för vilka faktorer som påverkar valet att anlita eller inte anlita en revisor i etablerade samt nyetablerade bolag.  Genom intervjuer har studien undersökt vilka faktorer ägarna i både etablerade och nyetablerade anser påverkar valet att anlita revisor. Studiens teoretiska referensram är baserad på agentteorin, legitimitetsteorin, institutionellateorin samt intressentteorin. Referensramen ligger sedan till grund för insamlingen av empiri och genomförande av analysen. Den upplevda revisionsnyttan kunde analyseras genom att vi identifierade olika faktorer som anses påverka valet av att anlita revisor. Enligt studien kan vi inte påvisa någon åtskillnad angående revisionens upplevda nytta mellan etablerade och nyetablerade bolag. Studien visar indikationer på att faktorer som kunskapstillförsel, förbättring, försäkring, tradition, trygghet och legitimitet förklarar vad ägarna anser vara nyttan med revision. Vidare är dessa faktorer bidragande orsaker till att etablerade och nyetablerade bolag väljer att anlita en revisor. / The removal of the auditor requirement has led to the fact that a small company stands between hiring an auditor or not. The purpose of the study was to explore how the perceived usefulness of auditing affects the choice of hiring an auditor or not, for established and new established companies. The survey was conducted through a qualitative research method whose purpose was to gain an in-depth understanding of the factors that influence the above mentioned choice regarding established and new established companies. Through interviews, the study examined the factors the owners in both established and new established companies consider to affect the choice to hire auditor. The theoretical framework is based on agent theory, legitimacy theory, institutional theory and stakeholder theory. The framework is the basis for the collection of empirical data and the analysis. The perceived usefulness of hiring an auditor could be analyzed in that we identified various factors considered to influence the choice of hiring an auditor. According to the study, we can not show any distinction regarding auditing perceived benefit between established and newly established companies. The study shows indications that factors such as the supply of knowledge, improvement, insurance, tradition, security and legitimacy explains what the owners consider to be the benefits of auditing. Furthermore, these factors are contributing causes in why established and newly established companies choose to hire an auditor.