Research On The Restraining Effect Of Key Audit Matters On Stock Price Crash Risk

Faced with the status quo that audit report tends to be the same and its function tends to fade,scholars,practitioners and regulatory departments in various countries have triggered a fierce discussion on improving audit report,and thus Key Audit Matters arise at the historic moment.In China,as the Ministry of Finance,PRC issued a number of new audit standards at the end of 2016,an innovative measure aimed at changing the status quo of audit reports in the audit industry gradually began to be implemented,and Key Audit Matters gradually came into the public’s view.Based on the sample data of China’s A-share listed companies from 2015 to 2019,this paper examines the policy effect of Key Audit Matters by taking the inhibiting effect of stock price crash risk as the entry point.It is found that the communication of Key Audit Matters does restrain the stock price crash risk of listed companies.At the same time,the listed companies whose audit reports contain more Key Audit Matters have lower crash risk,and this phenomenon is more obvious in the pilot companies.In terms of different types of Key Audit Matters,for pilot companies,compared with the disclosure of other types of Key Audit Matters,asset impairment category and related party transaction category can promote the stability of listed companies’ stock prices.For non-pilot companies,the equity investment class can play a role in stabilizing the stock price.In further analysis,this paper finds that the inhibiting effect of Key Audit Matters on stock price crash risk is more obvious in listed companies with relatively opaque information environment and poor regulatory environment,but less obvious in listed companies with high operational complexity.Research conclusion of this article has a certain practical significance for regulators to furtherly refine the rules,and can build confidence for the continuous advance of the criterion and its improvement.At the same time,heterogeneity effect of different kinds of Key Audit Matters also inspires us that we should specifically analyze the problem to build a clear,orderly capital market environment.