Auditing of financial statements increases the transparency and quality of disclosure of financial statements and thus reduces information asymmetry. The type of auditor's opinion has a great impact on the transparency and quality of disclosure of financial statements and ultimately information asymmetry. The purpose of auditing financial statements is for the auditor to comment on the correctness of preparation and presentation of financial statements from all important aspects in accordance with common accounting principles. The auditor's opinion increases the validity of financial statements with this type of assurance in non-absolute form. But factors such as judgment, the use of sampling in the investigation, the inherent limitations of accounting systems and internal controls make it impossible to achieve absolute certainty in the audit. Information asymmetry exists if managers and the market have the same information about the firm, so they tolerate uncertainty about the firm equally. But in case of information asymmetry, the managers have more and better information than the market due to having private and confidential information about the company. On the other hand, one of the revealing information about the company's financial situation is the auditors' reports.
The confidential information of the informed trader reveals the difference between the market value and the future value of the company. A knowledgeable trader makes a profit by trading against the flow of exchanges of market makers and uninformed traders. Normally, knowledgeable people trade frequently and in relatively small amounts in order to achieve the maximum desired profit and hide their transactions. In this way, the confidential information is gradually reflected in the prices and the stock value tends to its intrinsic value. The increase of knowledgeable people in the market increases the competition in the market, which results in faster reflection of confidential information in the prices. In such a situation, the information content of prices will increase and there will be less need for market operators. The more information competition there is, the less the misuse of confidential information by knowledgeable people. As a result, investors in this situation demand lower returns on average for this level of information asymmetry, and this means lower pricing of information asymmetry. So it can be concluded that auditors' report can reduce this information asymmetry and help investors in choosing the best stocks.