Based on trade credit,this paper examines how suppliers and customers interpret and respond to disclosed key audit matters in the new audit report.The study finds that the disclosure of key audit matters will significantly reduce the enterprises'trade credit financing,indicating that suppliers and customers interpret key audit matters as risk information.Cross-sectional mechanism test finds that when corporate governance is better,both the concerns of suppliers and customers about the quality of financial reports and negative effect of key audit matters on trade credit can be alleviated.In addition,when the number of key audit matters is larger and the key audit matters are related to mortgageable assets,the negative impact of key audit matters on trade credit is more pronounced;when audit response strength of key audit matters is higher and have a conclusive evaluation,the negative impact can be mitigated.This paper provides further empirical evidence for the effect of the new audit report reform from the perspective of supply chain relationship,which may have implications for enterprises and standard-setters.
new audit reportkey audit matterstrade creditcorporate governance
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