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The impact of financial risk on boilerplate of key audit matters: Evidence from China

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  • Wang, Qi
  • Zhang, Lin
  • Ma, Qianqun
  • Wu, Chong

Abstract

This paper examines whether auditors of firms with higher financial risk disclose less boilerplate of KAMs. Our empirical study demonstrates that KAMs are more differentiated if the firms are subject to higher financial risk. This association is only pronounced for client firms in the weaker legal environment and audit firms with larger market shares. In addition, client pressure will weaken the motivation of auditors to differentiate KAMs of firms with a higher level of financial risk. We also find that auditors are more likely to differentiate KAMs related to firms’ profitability if firms are subject to high financial risk.

Suggested Citation

  • Wang, Qi & Zhang, Lin & Ma, Qianqun & Wu, Chong, 2024. "The impact of financial risk on boilerplate of key audit matters: Evidence from China," Research in International Business and Finance, Elsevier, vol. 70(PB).
    • Handle: RePEc:eee:riibaf:v:70:y:2024:i:pb:s0275531924001831
    DOI: 10.1016/j.ribaf.2024.102390
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    References listed on IDEAS

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