Consequences of Expanded Audit Reports: Evidence from the Justifications of Assessments in France

Jean Bédard, Nathalie Gonthier-Besacier () and Alain Schatt
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Jean Bédard: AUF - Agence Universitaire de la Francophonie
Nathalie Gonthier-Besacier: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA [2016-2019] - Université Grenoble Alpes [2016-2019]

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Abstract: Since 2003, French auditors must disclose justifications of assessments (JOAs) in expanded audit reports. Like critical audit matters recently introduced in the US and key audit matters introduced by international standard setters, the purpose of JOAs is to enhance the informative value of audit reports. Based on French audit reports issued from 2002 to 2011, we analyze the impact of first-time implementation of JOAs, and the impact of new JOAs in subsequent years, on investors (measured by abnormal returns and abnormal trading volume) and on the audit (measured by audit report lag, abnormal accruals, and audit fees). For both first-time implementation of JOAs and new JOAs in subsequent years we find no significant market reaction to their disclosure and no significant effect on audit report lag, audit quality and audit fees. Overall, our results suggest that the French expanded audit report did not have the expected consequences on investors and the audit.

Keywords: Audit Report; Key Audit Matters; Expanded Audit Report; Market Reaction; Audit fees; Audit quality (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (20)

Published in Auditing: A Journal of Practice and Theory, 2019, 38 (5), pp.23-45. ⟨10.2308/ajpt-52339⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02011144

DOI: 10.2308/ajpt-52339

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