Research On Research On Key Audit Matters And Investor's Decision-Making Behavior

Independent audit plays a vital role in promoting capital market stability,and the audit report is an important medium for CPA to communicate with the readers of the report.The information of the report will directly affect the reaction of the capital market.In December 2016,China's Ministry of Finance promulgated the new auditing standards.The most core revision is requiring certified public accountants to communicate key audit matters in the audit reports.According to "China Certified Public Accountants Audit Standard No.1504-Communicating Key Audit Matters in Audit Reports",key audit matters refer to matters that certified public accountants based on professional judgment consider to be the most important to the current financial statements audit.In order to test the information value of key audit matters,explore the implementation effect brought by their disclosure in the audit report,this paper put forward the research problem: whether the disclosure of the key audit matters will affect the investor's behavior decision.How will the disclosure(content and intensity of these matters)in the audit report affect the investor's decision-making behavior?In view of this,this paper carefully combs the research results of key audit matters and investor decision-making behaviors,analyzes and puts forward research assumptions based on the principal agent theory,information asymmetry theory,signal transmission theory,and effective market theory.Using the method of combination of empirical research and normative research,this article takes the financial data and market transaction data of A+H shares listed companies from 2014 to 2017 as a sample.And 276 observational variables were selected according to the existing principles.This paper adopts the event research method and expresses the investor's decision-making behavior by using the cumulative abnormal return rate of the listed company's stock price.The empirical data is used to test the relationship between the disclosure of key audit matters and the investor's decision-making behavior.Empirically found that:(1)In the new personalized audit report,the disclosure of key audit matters provides investors with new information value,promotes rational decision-making by investors,and ultimately reduces the abnormal return rate of stock prices.(2)The increase in the proportion of unconventional disclosures other than “impairment and income” in key audit matters has caused obstacles to investors' rational decision-making,which ultimately led to an increase in the abnormal rate of return on stock prices.(3)The disclosure of key audit matters will not affect the decision-making behavior of investors.The overly lengthy key audit matters may not achieve better information transmission effects.According to the conclusion of this paper,this article puts forward relevant suggestions to CPAs and investors.In practice CPAs,in order to improve the effect of information transmission on key audit matters,shall fully implement the work of the disclosure of key audit matters,obtain sufficient audit evidence,enhance the accuracy of their representations and reasonably grasp the disclosure of key audit matters.Investors should improve their own professional level and interpretation ability,establish an understanding of the audit work,make rational use of key audit matters,pay attention to and understand its content,and then make more rational investment decisions.The innovation of this article is mainly based on the background of the reform of auditing standards in China.The author finds that most of the research on the key audit matters is based on the interpretation of the content of the new standards and the classification and description of the key audit matters.Few scholars use the existing empirical data to make empirical tests.This study adopts empirical research method,collects key audit matters and classify it according to its contents.And then,from the perspective of the content of key audit matters and their disclosure intensity,this article,in a sample company of A+H shares in China,discusses the relationship between the disclosure of key audit matters and the decision-making behavior of investors,and studies the information value of key audit matters in the capital market.