The effect of key audit matters reviewing on loan approval decisions?

Jie Yao, Shengqi Su and Shanmin Liu

Finance Research Letters, 2023, vol. 58, issue PB

Abstract: The existing literature does not provide a definitive statement on whether the inclusion of Key Audit Matters (KAM) in accounting research increases the likelihood of loan approval by bank approvers. This study investigates the combined effects of approvers' trait skepticism, their professional background in accounting and auditing, as well as the familiarity and readability of KAM content, on loan approval probability. The findings indicate that an increased duration spent reading 'How' paragraph enhances the probability of loan approval by approvers. Moreover, this positive correlation is more pronounced for familiar and easily legible content, highly skeptical individuals, and those with expertise in accounting and auditing. These results offer novel insights and research perspectives for KAM while expanding upon the literature concerning factors influencing approvers' loan approvals.

Keywords: Key audit matters; Loan approval; Trait skepticism; Background in accounting and auditing; Familiarity; Readability (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323008395

DOI: 10.1016/j.frl.2023.104467

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