TITLE:
Informational Value in Critical Audit Matters—Evidence from Institutional Investors in Shanghai Stock Market
AUTHORS:
Xueyu Li
KEYWORDS:
Critical Audit Matters, Institutional Investor, Informational Asymmetry, Audit Firms
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.10 No.2,
February
13,
2020
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).