Research On The Impact Of Key Audit Disclosure On The Risk Of Stock Price Collapse

In recent years,the phenomenon of the sharp rise and fall of China's capital market has aroused widespread concern.The collapse of the stock price caused by the sharp fall of the stock price has seriously impacted China's capital market and interfered with the healthy and stable development of China's financial market.In the report of the 19 th National Congress of the Communist Party of China,it is proposed for the first time to fight three major battles,in which the prevention and resolution of major risks are put in the first place.Therefore,it is urgent to reduce the risk of stock price collapse of the company and the whole capital market and study its influencing factors.The company's stock price is usually concerned by many investors,and their decision-making basis is often inseparable from the audit report.The traditional audit report is standardized and templated,which focuses on issuing audit conclusions.The content of information disclosed is insufficient,which has been difficult to meet the requirements of information users.In order to better serve the users of financial statements,the International Auditing and Assurance Standards Board(IAASB)has carried out a major reform in the audit report mode,and issued a new revised audit report standard in January 2015.China adheres to international standards and promotes the convergence of auditing standards with international standards.In December 2016,the Ministry of Finance issued the auditing standards for Chinese certified public accountants No.1504-Communication of key audit matters in audit reports(CAS1504),which requires that the audit reports of A + H shares for use in the mainland be implemented on January 1,2017,while the listing of shares on Shanghai and Shenzhen stock exchanges on January 1,2018 Companies,companies applying for initial public offering of shares,and companies listed on the new three board innovation layer that offer bonds to public investors all need to implement new audit reporting standards and increase the disclosure of key audit items.What is the effect of disclosure of key audit matters? Can we effectively reduce the risk of stock price collapse? Based on the principal-agent theory,efficient market theory,information asymmetry theory and signal transmission theory,this paper collects the key audit matters of Shanghai and Shenzhen A-share listed companies in the audit reports in 2016 and2017,and empirically studies the impact of the disclosure of key audit matters on the risk of stock price collapse.It is found that the disclosure of key audit matters can effectively reduce the risk of stock price collapse,and the more the number of disclosures,the more conducive to reduce the risk of future stock price collapse.Further research shows that the inhibition effect of key audit disclosure on the risk of future stock price collapse is significant in state-owned listed companies,but not in non-state-owned listed companies.The study also found that different categories of key audit disclosure have significant differences on the risk of future stock price collapse.The disclosure of goodwill can significantly reduce the risk of future stock price collapse,while the disclosure of income,accounts receivable,inventory and fixed assets has no significant correlation with the risk of future stock price collapse.Through the introduction of ESOP to reflect the agency cost of the company,it is also found that ESOP has a certain regulatory effect on the market impact of the disclosure of key audit matters.The possible contributions and innovations of this paper are as follows:(1)the previous literature research on the risk of stock price collapse seldom involves the policy research,which provides a new perspective for the research on the factors of the risk of stock price collapse;(2)the existing research on key audit matters rarely involves the empirical literature after the implementation of the new standards in 2017,which is rich in this research field;(3)This paper introduces ESOP into the study of the relationship between the key audit matters and the risk of stock price collapse,further verifies the governance effect of the disclosure of key audit matters on the capital market,which has certain theoretical significance and practical value for the government regulators to make policies and the vast number of audit report information users in the capital market to make decisions.