When Auditors Talk, Do Retail Investors Listen? Evidence from Expanded Audit Reports
Prof. Lin WANG, Associate Professor, Central University of Finance and Economics, Beijing, CHINA
Date: 27 November 2025 (Thursday)
Time: 10:00-11:30
Venue: E22-G008
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Abstract
In response to increasing public demand for more audit information, regulators worldwide have mandated expanded audit reports that disclose Key Audit Matters (KAMs). We analyze whether investors pay attention to KAMs exploiting novel data from the Investor Interaction Platform (IIP) in China, where investors frequently communicate with firms by asking questions. We show that investors are more likely to raise KAM-related questions on the IIP following KAM disclosures. Our results also indicate that this effect is more salient when there are more retail shareholdings, when the KAM is uncommon in the industry, and when the firm’s information environment is more opaque. In terms of trading behavior, we find that the increase in KAM-related questions leads to higher trading volumes. Our findings suggest that investors attend to KAMs and that their processing of KAM information translates into trading activities.
Speaker
Prof. WANG is currently an Associate Professor in the Department of Audit at the Central University of Finance and Economics. She obtained her PhD in Accounting at the Chinese University of Hong Kong in 2019. She started her career as an assistant professor in the School of Accounting at the Central University of Finance and Economics in September 2019 and served as an exchange officer in the Data Audit Research Office of the National Audit Office of China from July 2021 to January 2022. Prof. WANG’s award-winning paper: Network Analysis of Audit Partner Rotation” was nominated for the 2022) wC3535 Forum Annual Best Paper Award; and “Network Connectedness and the Convergence of Audit Styles” won the 4th New System Accounting Ruisi Outstanding Paper Award.
All are welcome!
