Research On The Impact Of Key Audit Matter Disclosure On Market Response And Audit Quality

In order to better serve the users of statements,the International Audit and Assurance Standards Board(IAASB)has reformed the model of audit reports.In January 2015,it issued a new revised audit reporting standard,which stipulates that new auditing standards should be applied in audit reports from December 2016.Among them is"ISA701-Communicating Key Audit Matters in Independent Auditor's Report",which requires more informative audit reports for auditees.In December 2016,China issued 12 standards,such as"China CPA Auditing Standards No.1504-Communication of Key Audit Matters in Audit Reports",which require that key audit matters be added to audit reports.To verify the effect of disclosure of key audit items,we can test it from two aspects:market reaction and audit quality.In the aspect of market reaction,the cumulative excess return rate is regarded as its proxy variable,and classified according to different types of accounting firms;in the aspect of audit quality,the maneuverable accrued profit is regarded as its proxy variable.The specific research process is as follows:Firstly,the companies in A+H in 2016 are taken as the experimental group,and these companies are matched with pure A-share listed companies one-to-one through PSM matching method,and their data in mid-2015 are collected and collated for relevant verification.In terms of market reaction,this paper studies whether there are significant differences in the cumulative excess return during the window period of audit report issuance,and combines with the types of accounting firms.In the aspect of audit quality,this paper studies whether the audit quality has been improved after the disclosure of key audit items.The second is to study the effect of comprehensive disclosure of key audit items.In terms of market reaction,according to the:industry classification of the Securities Regulatory Commission,10%samples were randomly selected from each industry,and the 2017 and 2016 annual reports were analyzed by multiple linear regression.In terms of audit quality,a multiple linear regression analysis was conducted for all samples in the annual reports of 2016 and 2017.Finally,the conclusion is drawn:in the two years after the application of the standards,the disclosure of key audit items can bring positive market reaction,and the positive market reaction caused by the"four major"disclosure events is more obvious;at the same time,the disclosure of key audit items can effectively improve the audit quality.This study has certain theoretical and practical significance:First,from the perspective of the regulatory authorities,it can test the effect of the implementation of the disclosure standards of key audit matters,and provide basis and reference for the direction of future audit standards reform according to the implementation effect.Secondly,for market investors,it can influence investors' decision-making,increase their reading and understanding of audit reports,and improve public supervision of listed companies.Finally,from the perspective of CPA,it can enhance auditors' understanding of the new standards,remind auditors to communicate with the audited units well and maintain them in the working process.Self-independence,improve the quality of audit services.