To read this content please select one of the options below:

Disclaimer effect of key audit matters in China: negative press coverage and boilerplate

Qianqun Ma (School of Economics and Management, Southwest Jiaotong University, Chengdu, China)
Jianan Zhou (School of Economics and Management, Southwest Jiaotong University, Chengdu, China)
Qi Wang (Business School, Southwest University of Political Science and Law, Chongqing, China)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 9 December 2022

45

Abstract

Purpose

Using China’s key audit matters (KAMs) data, this study aims to examine whether negative press coverage alleviates boilerplate KAMs.

Design/methodology/approach

This study uses Levenshtein edit distance (LVD) to calculate the horizontal boilerplate of KAMs and investigates how boilerplate changes under different levels of the perceived legal risk.

Findings

The findings indicate that auditors of firms exposed to substantial negative press coverage will reduce the boilerplate of KAMs. This association is more significant for auditing firms with lower market share and client firms with higher financial distress. Additionally, the authors find that negative press coverage is more likely to alleviate the boilerplate disclosure of KAMs related to managers’ subjective estimation and material transactions and events. Furthermore, the association between negative press coverage and boilerplate KAMs varies with the source of negative news.

Originality/value

The findings suggest that upon exposure to negative press coverage, reducing the boilerplate of KAMs has a disclaimer effect for auditors.

Keywords

Acknowledgements

Funding: This paper was supported by the Humanities and Social Sciences Foundation of Ministry of Education of China (No.19XJA630006, 19YJCZH167), the National Natural Science Foundation of China (No.71828203, 72072147), China Postdoctoral Science Foundation (No.2019M663886XB) and the Humanities and Social Sciences Research Program of Chongqing Municipal Education Commission in 2020 (No.20SKGH012).

Ethical approval: This study does not contain any studies with human participants or animals performed by any of the authors.

Informed consent: Informed consent was obtained from all individual participants included in the study.

Citation

Ma, Q., Zhou, J. and Wang, Q. (2022), "Disclaimer effect of key audit matters in China: negative press coverage and boilerplate", Managerial Auditing Journal, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MAJ-02-2022-3463

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

Related articles