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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Main Authors: GOH, Beng Wee, LEE, Kiat Bee Jimmy, LI, Dan, WANG, Muzhi
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2024
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Online Access: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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spelling 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
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Expanded audit report
information content
key audit matters.
Accounting
Corporate Finance
spellingShingle 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
description 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.
format text
author GOH, Beng Wee
LEE, Kiat Bee Jimmy
LI, Dan
WANG, Muzhi
author_facet GOH, Beng Wee
LEE, Kiat Bee Jimmy
LI, Dan
WANG, Muzhi
author_sort 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
publisher Institutional Knowledge at Singapore Management University
publishDate 2024
url 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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