Key audit matters and debt contracting: evidence from China

IF 2.8 3区 管理学 Q2 BUSINESS, FINANCE Managerial Auditing Journal Pub Date : 2022-06-14 DOI:10.1108/maj-06-2021-3210
Hui Liu, Jiaqi Ning, Yue Zhang, Junrui Zhang
{"title":"Key audit matters and debt contracting: evidence from China","authors":"Hui Liu, Jiaqi Ning, Yue Zhang, Junrui Zhang","doi":"10.1108/maj-06-2021-3210","DOIUrl":null,"url":null,"abstract":"\nPurpose\nIn an effort to make audit reports more informative to users, the Public Company Accounting Oversight Board and the International Auditing and Assurance Standards Board adopted a standard that requires auditors to disclose key audit matters (KAMs). This paper aims to explore the impact of the risk information provided by KAMs on corporate debt contracting.\n\n\nDesign/methodology/approach\nIn China, the KAM standard went into effect for A + H cross-listing companies in 2017 and became mandatory for all listed companies in 2018. This study takes this as an exogenous shock to examine the impact of the KAM disclosures on debt contracting. This study also designs a path analysis to open the “black box” between the risk information in KAMs and the risk perception of creditors. Moreover, This study conducts a textual analysis on the KAMs information based on samples after the release of the KAM standard.\n\n\nFindings\nThis study conducts difference-in-difference tests and find that the KAM disclosures decrease interest rates and increase the proportion of long-term debt. Path analyses reveal that the KAM disclosures lead to more favorable debt characteristics through decreasing information asymmetry. This study also finds that the more KAMs are disclosed, the more favorable debt characteristics are and that different categories of KAMs have different effects on debt contracting.\n\n\nOriginality/value\nThis paper highlights the benefits of KAM disclosures, which are consistent with the convergence argument of risk information disclosures. Investors’ reactions to KAMs are mixed because of the differences in how professional investors and nonprofessional investors interpret information. This study provides evidence of incrementally informative nature of KAMs from the perspective of debt holders, who are professional information users.\n","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":null,"pages":null},"PeriodicalIF":2.8000,"publicationDate":"2022-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"6","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Managerial Auditing Journal","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1108/maj-06-2021-3210","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 6

Abstract

Purpose In an effort to make audit reports more informative to users, the Public Company Accounting Oversight Board and the International Auditing and Assurance Standards Board adopted a standard that requires auditors to disclose key audit matters (KAMs). This paper aims to explore the impact of the risk information provided by KAMs on corporate debt contracting. Design/methodology/approach In China, the KAM standard went into effect for A + H cross-listing companies in 2017 and became mandatory for all listed companies in 2018. This study takes this as an exogenous shock to examine the impact of the KAM disclosures on debt contracting. This study also designs a path analysis to open the “black box” between the risk information in KAMs and the risk perception of creditors. Moreover, This study conducts a textual analysis on the KAMs information based on samples after the release of the KAM standard. Findings This study conducts difference-in-difference tests and find that the KAM disclosures decrease interest rates and increase the proportion of long-term debt. Path analyses reveal that the KAM disclosures lead to more favorable debt characteristics through decreasing information asymmetry. This study also finds that the more KAMs are disclosed, the more favorable debt characteristics are and that different categories of KAMs have different effects on debt contracting. Originality/value This paper highlights the benefits of KAM disclosures, which are consistent with the convergence argument of risk information disclosures. Investors’ reactions to KAMs are mixed because of the differences in how professional investors and nonprofessional investors interpret information. This study provides evidence of incrementally informative nature of KAMs from the perspective of debt holders, who are professional information users.
查看原文
分享 分享
微信好友 朋友圈 QQ好友 复制链接
本刊更多论文
关键审计事项与债务合同:来自中国的证据
目的为了使审计报告向用户提供更多信息,上市公司会计监督委员会和国际审计和保证标准委员会通过了一项标准,要求审计师披露关键审计事项。本文旨在探讨KAM提供的风险信息对公司债务契约的影响。设计/方法论/方法在中国,KAM准则对 + H于2017年交叉上市,并于2018年成为所有上市公司的强制性规定。本研究将此视为外生冲击,以检验KAM准则披露对债务契约的影响。本研究还设计了一个路径分析,以打开KAM中风险信息与债权人风险感知之间的“黑匣子”。此外,本研究基于KAM准则发布后的样本对KAM信息进行了文本分析。研究结果本研究进行了差异检验,发现KAM准则的披露降低了利率,增加了长期债务的比例。路径分析表明,KAM准则的披露通过减少信息不对称,导致了更有利的债务特征。本研究还发现,披露的KAM越多,债务特征就越有利,不同类别的KAM对债务契约的影响也不同。原创性/价值本文强调了KAM准则披露的好处,这与风险信息披露的趋同论点一致。由于专业投资者和非专业投资者对信息的解读方式不同,投资者对KAM的反应不一。这项研究从专业信息用户——债务持有人的角度提供了KAM增量信息性的证据。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 去求助
来源期刊
CiteScore
5.40
自引率
13.80%
发文量
45
期刊介绍: The key areas addressed are: ■Audit and Assurance (financial and non-financial) ■Financial and Managerial Reporting ■Governance, controls, risks and ethics ■Organizational issues including firm cultures, performance and development In addition, the evaluation of changes occurring in the auditing profession, as well as the broader fields of accounting and assurance, are also explored. Debates concerning organizational performance and professional competence are also covered.
期刊最新文献
How hours allocated to year-round auditing procedures affect audit quality Ambiguity in international financial reporting standards (IFRS) and its impact on judgments of auditors Product market competition and audit fees: new evidence The impact of remote auditing on audit quality: the moderating role of technology readiness CEO inside debt and industry specialist auditor
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
现在去查看 取消
×
提示
确定
0
微信
客服QQ
Book学术公众号 扫码关注我们
反馈
×
意见反馈
请填写您的意见或建议
请填写您的手机或邮箱
已复制链接
已复制链接
快去分享给好友吧!
我知道了
×
扫码分享
扫码分享
Book学术官方微信
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术
文献互助 智能选刊 最新文献 互助须知 联系我们:info@booksci.cn
Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。
Copyright © 2023 Book学术 All rights reserved.
ghs 京公网安备 11010802042870号 京ICP备2023020795号-1