Informativeness of key audit matters: Evidence from China
This study examines whether the key audit matters (KAMs) disclosed in expanded audit reports as a part of recent regulatory reforms are informative for investors in an emerging economy setting. Using the recent adoption of expanded audit reports for firms listed exclusively in Mainland China, we fin...
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sg-smu-ink.soa_research-30552024-09-02T06:37:37Z Informativeness of key audit matters: Evidence from China GOH, Beng Wee LEE, Kiat Bee Jimmy LI, Dan WANG, Muzhi This study examines whether the key audit matters (KAMs) disclosed in expanded audit reports as a part of recent regulatory reforms are informative for investors in an emerging economy setting. Using the recent adoption of expanded audit reports for firms listed exclusively in Mainland China, we find robust evidence that the abnormal trading volume and earnings response coefficients (ERCs) are higher and that stock price synchronicity is lower during the postadoption than preadoption period. In additional tests, we find evidence that KAMs are more informative for non-state-owned enterprises (non-SOEs), smaller firms, and firms with a smaller analyst following. Finally, we find that investors respond to the characteristics of KAM disclosures, providing corroborative evidence of the informativeness of these disclosures. Overall, our study provides systematic evidence that KAMs are incrementally informative for investors in an emerging economy. 2024-08-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/2028 info:doi/10.2308/AJPT-2020-099 https://ink.library.smu.edu.sg/context/soa_research/article/3055/viewcontent/Informativeness_of_Key_Audit_Matters___SSRN.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Expanded audit report information content key audit matters. Accounting Corporate Finance |
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Expanded audit report information content key audit matters. Accounting Corporate Finance GOH, Beng Wee LEE, Kiat Bee Jimmy LI, Dan WANG, Muzhi Informativeness of key audit matters: Evidence from China |
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This study examines whether the key audit matters (KAMs) disclosed in expanded audit reports as a part of recent regulatory reforms are informative for investors in an emerging economy setting. Using the recent adoption of expanded audit reports for firms listed exclusively in Mainland China, we find robust evidence that the abnormal trading volume and earnings response coefficients (ERCs) are higher and that stock price synchronicity is lower during the postadoption than preadoption period. In additional tests, we find evidence that KAMs are more informative for non-state-owned enterprises (non-SOEs), smaller firms, and firms with a smaller analyst following. Finally, we find that investors respond to the characteristics of KAM disclosures, providing corroborative evidence of the informativeness of these disclosures. Overall, our study provides systematic evidence that KAMs are incrementally informative for investors in an emerging economy. |
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text |
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GOH, Beng Wee LEE, Kiat Bee Jimmy LI, Dan WANG, Muzhi |
author_facet |
GOH, Beng Wee LEE, Kiat Bee Jimmy LI, Dan WANG, Muzhi |
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GOH, Beng Wee |
title |
Informativeness of key audit matters: Evidence from China |
title_short |
Informativeness of key audit matters: Evidence from China |
title_full |
Informativeness of key audit matters: Evidence from China |
title_fullStr |
Informativeness of key audit matters: Evidence from China |
title_full_unstemmed |
Informativeness of key audit matters: Evidence from China |
title_sort |
informativeness of key audit matters: evidence from china |
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Institutional Knowledge at Singapore Management University |
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2024 |
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https://ink.library.smu.edu.sg/soa_research/2028 https://ink.library.smu.edu.sg/context/soa_research/article/3055/viewcontent/Informativeness_of_Key_Audit_Matters___SSRN.pdf |
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