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Informational Value in Critical Audit Matters—Evidence from Institutional Investors in Shanghai Stock Market
Accounting Department, Management College, Jinan University, Guangzhou, China
- 1 Accounting Department, Management College, Jinan University, Guangzhou, China
American Journal of Industrial and Business Management·Volume 10 (2020)·Pages 286–304·Published 4 February 2020·DOI10.4236/ajibm.2020.102018
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Abstract
A newly released audit principle required all public companies to include critical audit matters (Cam) in financial reports, whose features and informational value was empirically studied in this paper. Results showed that, current Cams are quantitatively small, accurately and specifically poor and they mostly come in statements rather than in forms, and institutional investors withdrew more investment as the number and accuracy of cams went up. Further studies showed that the informational value of Cams was more significant in companies with high informational asymmetry and companies audited by relatively less professional audit firms (neither international big 4 nor national big 10 audit firms).
KeywordsCritical Audit MattersInstitutional InvestorInformational AsymmetryAudit Firms
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