Does reduced boilerplate of KAMs indicate increased audit effort? Evidence from China

Qianqun Ma, Qi Wang, Kongwen Wang and Chong Wu

International Review of Economics & Finance, 2024, vol. 96, issue PC

Abstract: By examining the effects of media coverage and legal environment and the modifying effect of auditors' market shares, this paper investigates whether reduced boilerplate of key audit matters (KAMs) reflects increased audit effort. Our findings indicate that auditors can change boilerplate of KAMs according to the tone of media coverage: auditors may reduce boilerplate of KAMs when firms are exposed to more negative media coverage and may increase boilerplate of KAMs when firms are exposed to more positive media coverage. Auditors of firms that are exposed to weaker legal environment reduce boilerplate of KAMs. Boilerplate of KAMs disclosed by audit firms with larger market shares is more significantly influenced by negative media coverage and legal environment than those with smaller market shares. Additionally, the effects of media coverage and legal environment on boilerplate of KAMs are only significant for the sub-samples with non-state-owned enterprises (non-SOEs) and higher information symmetry. These results prove that reduced boilerplate of KAMs reflects increased audit effort.

Keywords: Key audit matters (KAMs); Media coverage; Legal risk; Textual similarity; Audit effort (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056024006890
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:96:y:2024:i:pc:s1059056024006890

DOI: 10.1016/j.iref.2024.103697

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().