The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia

Khawla Hlel; Ines Kahloul Nafti

doi:doi:10.11648/j.ijafrm.20220704.12

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The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia

Khawla Hlel, Ines Kahloul Nafti

Published in International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 4)

Received: 21 August 2022 Accepted: 13 September 2022 Published: 29 October 2022

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Abstract

This research investigates the impact of Key Audit Matters (KAM) on financial information quality in Tunisian firms. For this reason, we use 52 Tunisian firms for the period 2017-2020. Our GLS and GMM regressions indicate that, in agreement with the agency theory, external auditor has an effective role, as an instrument of monitoring, to prohibit the opportunistic activities of managers. It supervises the manager’s behavior by the disclosure of KAM. Hence, it serves as a crucial tool that contributes to improve financial information quality and to decrease information asymmetry. In addition, it is considered as an important mechanism for preserving trust in financial reporting and integrity of financial information. This study is important for potential investors who should assess KAM when evaluating firms. Furthermore, our results will be useful to companies because they provide evidence that the external auditor can effectively reduce managerial opportunistic behavior and enhance information quality. Finally, they could encourage audit regulators to ameliorate the audit standards.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 4)
DOI	10.11648/j.ijafrm.20220704.12
Page(s)	150-156
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Key Audit Matters (KAM), Information Quality, Tunisian Firms, Generalized Last Squares

References

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[4]	Christensen, B. E., Glover, S. M. and Wolfe, C. J. (2014), “Do critical audit matter paragraphs in the audit report change nonprofessional investors’ decision to invest?” Auditing: A Journal of Practice & Theory, Vol. 33 No. 4, pp. 71-93.
[5]	Cohen, J., Krishnamoorthy, G. and Wright, A. (2004), “The corporate governance mosaic and financial reporting quality”, Journal of Accounting Literature, Vol. 23, pp. 87-152.
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[7]	Fakhfakh, I., and Jarboui, A. (2021), “The moderating role of audit quality on the relationship between auditor reporting and earnings management: empirical evidence from Tunisia”, EuroMed Journal of Business, Vol. 16 No. 4, pp. 416-430.
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[9]	Fuller, S. H., Joe, J. R. and Luippold, B. L. (2021), “The Effect of Auditor Reporting Choice and Audit Committee Oversight on Management Financial Disclosures”, The Accounting Review, Vol. 96 No. 6, pp. 239-274.
[10]	Gold, A., Heilmann, M., Pott, C., and Rematzki, J. (2020), “Do key audit matters impact financial reporting behavior?” International Journal of Auditing, Vol. 24 No. 2, pp. 232-244.
[11]	Hlel, K., Kahloul, I. and Bouzgarrou, H. (2020), “IFRS adoption, corporate governance and management earnings forecasts”, Journal of Financial Reporting and Accounting, Vol. 18 No. 2, pp. 325-342.
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APA Style

Khawla Hlel, Ines Kahloul Nafti. (2022). The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia. International Journal of Accounting, Finance and Risk Management, 7(4), 150-156. https://doi.org/10.11648/j.ijafrm.20220704.12

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ACS Style

Khawla Hlel; Ines Kahloul Nafti. The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia. Int. J. Account. Finance Risk Manag. 2022, 7(4), 150-156. doi: 10.11648/j.ijafrm.20220704.12

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AMA Style

Khawla Hlel, Ines Kahloul Nafti. The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia. Int J Account Finance Risk Manag. 2022;7(4):150-156. doi: 10.11648/j.ijafrm.20220704.12

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@article{10.11648/j.ijafrm.20220704.12,
  author = {Khawla Hlel and Ines Kahloul Nafti},
  title = {The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {4},
  pages = {150-156},
  doi = {10.11648/j.ijafrm.20220704.12},
  url = {https://doi.org/10.11648/j.ijafrm.20220704.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220704.12},
  abstract = {This research investigates the impact of Key Audit Matters (KAM) on financial information quality in Tunisian firms. For this reason, we use 52 Tunisian firms for the period 2017-2020. Our GLS and GMM regressions indicate that, in agreement with the agency theory, external auditor has an effective role, as an instrument of monitoring, to prohibit the opportunistic activities of managers. It supervises the manager’s behavior by the disclosure of KAM. Hence, it serves as a crucial tool that contributes to improve financial information quality and to decrease information asymmetry. In addition, it is considered as an important mechanism for preserving trust in financial reporting and integrity of financial information. This study is important for potential investors who should assess KAM when evaluating firms. Furthermore, our results will be useful to companies because they provide evidence that the external auditor can effectively reduce managerial opportunistic behavior and enhance information quality. Finally, they could encourage audit regulators to ameliorate the audit standards.},
 year = {2022}
}

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TY - JOUR
T1 - The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia
AU - Khawla Hlel
AU - Ines Kahloul Nafti
Y1 - 2022/10/29
PY - 2022
N1 - https://doi.org/10.11648/j.ijafrm.20220704.12
DO - 10.11648/j.ijafrm.20220704.12
T2 - International Journal of Accounting, Finance and Risk Management
JF - International Journal of Accounting, Finance and Risk Management
JO - International Journal of Accounting, Finance and Risk Management
SP - 150
EP - 156
PB - Science Publishing Group
SN - 2578-9376
UR - https://doi.org/10.11648/j.ijafrm.20220704.12
AB - This research investigates the impact of Key Audit Matters (KAM) on financial information quality in Tunisian firms. For this reason, we use 52 Tunisian firms for the period 2017-2020. Our GLS and GMM regressions indicate that, in agreement with the agency theory, external auditor has an effective role, as an instrument of monitoring, to prohibit the opportunistic activities of managers. It supervises the manager’s behavior by the disclosure of KAM. Hence, it serves as a crucial tool that contributes to improve financial information quality and to decrease information asymmetry. In addition, it is considered as an important mechanism for preserving trust in financial reporting and integrity of financial information. This study is important for potential investors who should assess KAM when evaluating firms. Furthermore, our results will be useful to companies because they provide evidence that the external auditor can effectively reduce managerial opportunistic behavior and enhance information quality. Finally, they could encourage audit regulators to ameliorate the audit standards.
VL - 7
IS - 4
ER -

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Author Information

Khawla Hlel

Department of Accounting and Finance, Faculty of Economics and Management, Sousse University, Sousse, Tunisia
Ines Kahloul Nafti

Department of Accounting and Finance, Higher Institute of Management, Sousse University, Sousse, Tunisia

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APA Style

Khawla Hlel, Ines Kahloul Nafti. (2022). The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia. International Journal of Accounting, Finance and Risk Management, 7(4), 150-156. https://doi.org/10.11648/j.ijafrm.20220704.12

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ACS Style

Khawla Hlel; Ines Kahloul Nafti. The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia. Int. J. Account. Finance Risk Manag. 2022, 7(4), 150-156. doi: 10.11648/j.ijafrm.20220704.12

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AMA Style

Khawla Hlel, Ines Kahloul Nafti. The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia. Int J Account Finance Risk Manag. 2022;7(4):150-156. doi: 10.11648/j.ijafrm.20220704.12

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@article{10.11648/j.ijafrm.20220704.12,
  author = {Khawla Hlel and Ines Kahloul Nafti},
  title = {The Effect of Key Audit Matters on Financial Information Quality: The Case of Tunisia},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {4},
  pages = {150-156},
  doi = {10.11648/j.ijafrm.20220704.12},
  url = {https://doi.org/10.11648/j.ijafrm.20220704.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220704.12},
  abstract = {This research investigates the impact of Key Audit Matters (KAM) on financial information quality in Tunisian firms. For this reason, we use 52 Tunisian firms for the period 2017-2020. Our GLS and GMM regressions indicate that, in agreement with the agency theory, external auditor has an effective role, as an instrument of monitoring, to prohibit the opportunistic activities of managers. It supervises the manager’s behavior by the disclosure of KAM. Hence, it serves as a crucial tool that contributes to improve financial information quality and to decrease information asymmetry. In addition, it is considered as an important mechanism for preserving trust in financial reporting and integrity of financial information. This study is important for potential investors who should assess KAM when evaluating firms. Furthermore, our results will be useful to companies because they provide evidence that the external auditor can effectively reduce managerial opportunistic behavior and enhance information quality. Finally, they could encourage audit regulators to ameliorate the audit standards.},
 year = {2022}
}

Copy | Download