Informativeness of the expanded audit report: Evidence from China

This study investigates whether the expanded audit report is informative to investors in the setting of an emerging economy. Using the recent staggered adoption of the expanded audit report for A+H and A share firms in China, we find robust evidence that abnormal trading volume and earnings response...

Full description

Saved in:
Bibliographic Details
Main Authors: GOH, Beng Wee, LEE, Jimmy, LI, Dan, WANG, Muzhi
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2019
Subjects:
Online Access:https://ink.library.smu.edu.sg/soa_research/1853
https://ink.library.smu.edu.sg/context/soa_research/article/2880/viewcontent/Manuscript_submited_to_AJPT.pdf
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Singapore Management University
Language: English
Description
Summary:This study investigates whether the expanded audit report is informative to investors in the setting of an emerging economy. Using the recent staggered adoption of the expanded audit report for A+H and A share firms in China, we find robust evidence that abnormal trading volume and earnings response coefficients are higher, and stock price synchronicity are lower, in the post-adoption periods than in the pre-adoption periods. In additional tests, we find that the expanded audit report is more informative for non-State Owned Enterprises and for firms with higher information asymmetry. Overall, our study documents systematic evidence that the expanded audit report is incrementally informative to investors in an emerging economy.