Do key Audit Matters Differently Impact Accrual Earnings Management or Real Earnings Management?

Ziling Liu ()
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Ziling Liu: WeBank Institute of Financial Technology, Shenzhen University

A chapter in Proceedings of the 2024 6th Management Science Informatization and Economic Innovation Development Conference (MSIEID 2024), 2025, pp 26-32 from Springer

Abstract: Abstract This study investigates the effect of a new auditing standards (No. 1504) promulgated by the Ministry of Finance of China in December 2016, which requires auditors to disclose Key Audit Matters (KAM) and related opinions in the audit report. Using data of A-share listed companies in China from 2016 to 2020 through text analytics and manual comparison, this study provides evidence that KAM disclosure decreases companies’ earnings management, especially in the form of real earnings management. This effect is stronger with the increase of the number of KAM disclosed. This study adds to the literature that audit report and provides transparency signals for investors and regulators.

Keywords: earnings Management; New Audit Report Standards; Key Audit Matters (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-676-5_4

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DOI: 10.2991/978-94-6463-676-5_4

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