The Impact of Key Audit Matters on Earnings Management of Audited Companies

摘要

In order to increase the information content of audit reports and improve information transparency, the Ministry of Finance promulgated new audit report standards in 2016, the core of which is the newly formulated standards for key audit matters. In order to test the impact of the new audit report standards on audited entities, this article uses all A-share listed companies from 2014 to 2018 as a sample, and uses literature research and empirical testing methods to study whether the disclosure of key audit matters will affect the audited companies’ accrual and real earnings management. The study finds that the disclosure of key audit matters significantly reduced the accrual earnings management of the audited entity, and the greater the number of disclosures, the more obvious the inhibitory effect. From the perspective of event types, companies that disclose key audit issues related to accounts receivable and goodwill have a lower degree of actual earnings management. The study also finds that after the reform of the audit report, the real earnings management of the audited companies increased. This article provides evidence for the evaluation of the implementation of the new audit report standards from the perspective of corporate earnings management, and at the same time provides ideas for improving audit report standards.