Key audit matters' disclosure impact on investors' reactions, audit quality and audit fees: evidence from Europe

• Autor(a) principal: Carvalho, André Ricardo Marques
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/24128
• topic: Key audit matters; Investors' reactions; Audit quality; Audit fees; Matérias relevantes de auditoria; Reações dos investidores; Qualidade de auditoria; Honorários de auditoria

Throughout the years, the need for more relevant information led standard setters to reform the audit reporting model and, consequently, to introduce key audit matters' (KAM) disclosure. In this study, I investigate whether this additional disclosure has an impact on investors' reactions, audit quality, and audit fees. In order to achieve this, my sample includes data from listed companies from the main stock market indices of each European Union's country, from the two years after the transposition date of the requirements of Regulation nº. 537/2014 to the national legislation of each state member. To study KAM's disclosure effect on investors' reactions I use the association studies, the price model and return model, and an event study, the CAR model. For the audit quality's study, I use as proxy the discretionary accruals, while for audit fees I used the natural logarithm of audit fees. The results reveal that KAM's disclosure has no impact on investors’ reactions, audit quality and audit fees. The results find for investors' reactions might result of investors already be aware of the risks disclosed in KAM or because they believe that the auditor performed the necessary work to mitigate the disclosed risks. Audit quality' results may be driven from a lack of impact in the time resources and audit effort needed, while the results for audit fees might result of auditors absorbing any additional time or audit effort related to KAM's disclosure.