Key Audit Matters and Audit Insurance Value:Based on a Two-dimensional Test of Auditor’s Insurance Motivation and Investor Reaction
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Abstract Taking Shanghai and Shenzhen A-share listed companies from 2014 to 2019 as samples, this paper examines whether the disclosure of key audit matters has insurance value under the new audit report standards from the two dimensions of auditor insurance motivation and investor response, and tests whether the differentiated disclosure characteristics represent different levels of insurance value. The results are as follows: (1) Companies that disclose key audit matters will be required to pay higher insurance audit fees, and get a more positive response from investors. The paper uses DID and DID-PSM models to verify that they generated incremental insurance value. (2) Although the characteristic differences of the number of matters, whether to invite the experts to carry out audit procedures and whether to express concluding evaluations show different degrees of insurance value, the results of characteristic differences deviate in two dimensions which indicates that the impact of disclosure of key audit matters on the response of investors is not only insurance value. The conclusions are helpful for the market to understand the effect of new auditing reporting standards and has certain guiding significance for the behavioral choice of market subjects.
LI Xiaoyue,XIAO Xiang,JIA Lihuan. Key Audit Matters and Audit Insurance Value:Based on a Two-dimensional Test of Auditor’s Insurance Motivation and Investor Reaction. Economic Survey, 2021, 38(4): 083.
2021, Vol. 38 
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