Do Textual Similarity of Key Audit Matters Influence Investor Decisions?Evidence Based on the Cost of Equity Capital
The information content and decision usefulness of audit reports is an important topic of concern for both academics and practitioners.This paper investigates the specific effect of templated disclosure of key audit matters on the cost of equity capital of enterprises,using data from A-share listed companies in China from 2016 to 2020.It finds that templated disclosure of key audit matters significantly increases the cost of equity capital of enterpri-ses;the mechanism test finds that templated disclosure of key audit matters increases the cost of equity capital through two pathways,by reducing audit quality as perceived by investors and the accuracy of analysts'forecasts;Further analysis finds that this increasing effect is mainly reflected in non-industry expert audits,low educated auditor audit,low audit independence,low external attention;Examining the differential impact of boilerplate disclosure of different types of key audit matters and different dimensions of key audit matters,we find that investors pay more attention to asset impairment type key au-dit matters and the heterogeneous information of firms in the industry dimension.The research provides a reference for standard setters and regulators to im-prove the disclosure system of key audit matters and effectively promote the reform of audit reports.
Key Audit MattersTextual SimilarityCost of Equity Capital
万方数据
