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Consequences of Expanded Audit Reports : Evidence from the Justifications of Assessments in France

Author

Listed:
  • Jean H. Bédard

    (AUF - Agence Universitaire de la Francophonie)

  • Nathalie Gonthier-Besacier

    (CERAG - Centre d'études et de recherches appliquées à la gestion - UGA [2016-2019] - Université Grenoble Alpes [2016-2019])

  • Alain Schatt

    (LEG - Laboratoire d'Economie et de Gestion - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Since 2003, French auditors must disclose justifications of assessments (JOAs) in expanded audit reports. Like critical audit matters recently introduced in the US and key audit matters introduced by international standard setters, the purpose of JOAs is to enhance the informative value of audit reports. Based on French audit reports issued from 2002 to 2011, we analyze the impact of first-time implementation of JOAs, and the impact of new JOAs in subsequent years, on investors (measured by abnormal returns and abnormal trading volume) and on the audit (measured by audit report lag, abnormal accruals, and audit fees). For both first-time implementation of JOAs and new JOAs in subsequent years we find no significant market reaction to their disclosure and no significant effect on audit report lag, audit quality and audit fees. Overall, our results suggest that the French expanded audit report did not have the expected consequences on investors and the audit.

Suggested Citation

  • Jean H. Bédard & Nathalie Gonthier-Besacier & Alain Schatt, 2019. "Consequences of Expanded Audit Reports : Evidence from the Justifications of Assessments in France," Post-Print hal-02011144, HAL.
    • Handle: RePEc:hal:journl:hal-02011144
    DOI: 10.2308/ajpt-52339
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    Citations

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    Cited by:

    1. Pinto, Inês & Morais, Ana Isabel & Quick, Reiner, 2020. "The impact of the precision of accounting standards on the expanded auditor’s report in the European Union," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    2. Smith, Kecia Williams, 2023. "Tell Me More: A content analysis of expanded auditor reporting in the United Kingdom," Accounting, Organizations and Society, Elsevier, vol. 108(C).
    3. Hosseinniakani, Mahmoud & Overland, Conny & Samani, Niuosha, 2024. "Do key audit matters matter? Correspondence between auditor and management disclosures and the role of audit committees," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 55(C).
    4. 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).
    5. Sau Yu Ong & Robyn Moroney & Xinning Xiao, 2022. "How do key audit matter characteristics combine to impact financial statement understandability?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 805-835, March.
    6. Li, Valerie & Luo, Yan, 2023. "Costs and benefits of auditors' disclosure of critical audit matters: Initial evidence from the United States," Advances in accounting, Elsevier, vol. 60(C).
    7. Duboisée de Ricquebourg, Alan & Maroun, Warren, 2023. "How do auditor rotations affect key audit matters? Archival evidence from South African audits," The British Accounting Review, Elsevier, vol. 55(2).
    8. Ma, Jin & Coram, Paul & Troshani, Indrit, 2024. "The effect of key audit matters and management disclosures on auditors’ judgements and decisions: An exploratory study," The British Accounting Review, Elsevier, vol. 56(2).
    9. Kong, Dongmin & Ji, Mianmian & Liu, Shasha, 2022. "Does the mandatory disclosure of audit information affect analysts' information acquisition?," International Review of Financial Analysis, Elsevier, vol. 83(C).
    10. Marco Maggiorani, 2023. "The Audit Quality and the Cessation of the Activity of the Companies," International Journal of Business and Management, Canadian Center of Science and Education, vol. 18(1), pages 108-108, February.
    11. Elsayed, Mohamed & Elshandidy, Tamer & Ahmed, Yousry, 2023. "Is expanded auditor reporting meaningful? UK evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 53(C).
    12. Tarek Abdelfattah & Mohamed Elmahgoub & Ahmed A. Elamer, 2021. "Female Audit Partners and Extended Audit Reporting: UK Evidence," Journal of Business Ethics, Springer, vol. 174(1), pages 177-197, November.
    13. Xiancong Wu & Richard Skolnik & Hongxiu Luo, 2022. "The Market Impact of New Auditing Standards in China," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 53-68, January.
    14. Liu, Hui & Chang, Yufan & Zuo, Man, 2023. "Key audit matters and insider trading profitability: Evidence from China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(3).
    15. Zhang, Penny F. & Shailer, Greg, 2021. "Changes in audit effort and changes in auditors’ disclosures of risks of material misstatement," The British Accounting Review, Elsevier, vol. 53(3).
    16. Brian E. Daugherty & Denise Dickins & Marshall K. Pitman & Wayne A. Tervo, 2021. "The process of identifying and reporting CAMs: early evidence," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(1), pages 16-23, March.
    17. Yan Luo, 2021. "Determinants and consequence of critical audit matter disclosure: early evidence," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(4), pages 336-345, December.
    18. Ma, Qianqun & Zhou, Jianan & Wang, Qi & Wang, Kongwen, 2024. "The impact of key audit matters on goodwill accounting and investment behavior: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 93(C).

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