{"title":"Do firms incur financial restatements? A recognition study based on textual features of key audit matters reports","authors":"","doi":"10.1016/j.irfa.2024.103606","DOIUrl":null,"url":null,"abstract":"<div><div>This article uses China's A-share nonfinancial listed company reports from 2017 to 2019 as the research sample and analyzes three textual features of key audit matters using machine learning to identify financial restatement behaviors. Results show that firms with a worse level of key audit matter readability, a negative tone, and a greater level of detail had a higher probability of financial restatement behaviors. From this, investors can infer whether firms have strong internal or external monitoring. These correlations reflect the importance of standardized information disclosures and appropriate regulatory programs to safeguard investors' rights and interests.</div></div>","PeriodicalId":48226,"journal":{"name":"International Review of Financial Analysis","volume":null,"pages":null},"PeriodicalIF":7.5000,"publicationDate":"2024-09-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Review of Financial Analysis","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1057521924005386","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This article uses China's A-share nonfinancial listed company reports from 2017 to 2019 as the research sample and analyzes three textual features of key audit matters using machine learning to identify financial restatement behaviors. Results show that firms with a worse level of key audit matter readability, a negative tone, and a greater level of detail had a higher probability of financial restatement behaviors. From this, investors can infer whether firms have strong internal or external monitoring. These correlations reflect the importance of standardized information disclosures and appropriate regulatory programs to safeguard investors' rights and interests.
期刊介绍:
The International Review of Financial Analysis (IRFA) is an impartial refereed journal designed to serve as a platform for high-quality financial research. It welcomes a diverse range of financial research topics and maintains an unbiased selection process. While not limited to U.S.-centric subjects, IRFA, as its title suggests, is open to valuable research contributions from around the world.