The impact of financial risk on boilerplate of key audit matters: Evidence from China

Qi Wang, Lin Zhang, Qianqun Ma and Chong Wu

Research in International Business and Finance, 2024, vol. 70, issue PB

Abstract: This paper examines whether auditors of firms with higher financial risk disclose less boilerplate of KAMs. Our empirical study demonstrates that KAMs are more differentiated if the firms are subject to higher financial risk. This association is only pronounced for client firms in the weaker legal environment and audit firms with larger market shares. In addition, client pressure will weaken the motivation of auditors to differentiate KAMs of firms with a higher level of financial risk. We also find that auditors are more likely to differentiate KAMs related to firms’ profitability if firms are subject to high financial risk.

Keywords: Key audit matters; Financial risk; Textual similarity; Audit reports (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:70:y:2024:i:pb:s0275531924001831

DOI: 10.1016/j.ribaf.2024.102390

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