Key audit matters and insider trading profitability: Evidence from China

IF 2.9 3区 管理学 Q2 BUSINESS, FINANCE
Hui Liu , Yufan Chang , Man Zuo
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引用次数: 0

Abstract

The debate as to whether or not an expanded audit report is informative to the market persists, either from experimental and empirical study perspectives. With the utilization of 4,336 firm-year Chinese observations from 2016 to 2017, this study investigates whether the mandatory disclosure of key audit matters (KAMs) restricts insider trading profitability in China. The main test and robustness tests confirm the significant and negative relationship between KAM disclosure and insider trading profitability in the Chinese capital market. The study further explores the impact of KAMs’ textual characteristics using the KAM data from 2017 to 2020. The results suggest that firm-specific KAMs, longer KAMs, more readable KAMs, and more accurate KAMs reduce the insider trading profitability. Supplementary analysis shows that this effect only exists for opportunistic insider trading. In addition, the effect of KAM disclosure on insider trading profitability is further amplified by high institutional ownership, auditor industry specialization, and KAM with goodwill impairment matter. Overall, the study presents some evidence of the communicative value of KAM disclosure and provides a practical means to restrict insiders’ opportunistic behavior, highlighting the decision-making usefulness of KAMs for external investors.

关键审计事项与内幕交易盈利能力:来自中国的证据
从实验和实证研究的角度来看,关于扩大后的审计报告是否对市场有益的争论仍然存在。本研究利用2016年至2017年中国4336家公司的观察数据,探讨了关键审计事项的强制性披露是否限制了中国内幕交易的盈利能力。主检验和稳健性检验证实了中国资本市场内幕交易披露与内幕交易盈利能力之间存在显著负相关关系。本研究利用2017 - 2020年的KAM数据进一步探讨了KAM文本特征的影响。结果表明,企业特有的权责表、更长的权责表、更可读的权责表和更准确的权责表会降低内幕交易的盈利能力。补充分析表明,这种效应只存在于机会性内幕交易中。此外,高机构持股率、审计师行业专业化和具有商誉减值事项的鉴权披露对内幕交易盈利能力的影响被进一步放大。总体而言,本研究为知识产权披露的沟通价值提供了一些证据,并为限制内部人机会主义行为提供了一种实用手段,突出了知识产权对外部投资者的决策有用性。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
6.00
自引率
3.00%
发文量
24
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