Abstract

Financial reporting complexity impairs users’ ability to interpret and apply accounting information effectively. Despite ongoing simplification efforts by standard setters, concerns persist regarding its adverse impacts on decision-making quality. Focusing on hedge accounting, this study examines whether financial statement comparability helps users overcome such complexity, particularly in the context of analyst earnings forecasts. We begin by documenting the adverse impacts of hedge accounting...

Abstract

Present study uses texts of key audit matters (KAM) in auditors’ reports from 2016 to 2020 to explore whether the auditor busyness undermines the communicative value of KAM. Using text mining analysis, we measure two KAM characteristics: readability and specificity. We find that the busier the auditors, the more readable the KAM, i.e., the shorter the content and the lower frequency in using jargon. We also find that busy auditors provide more specific information in KAM. Our empirical results s...

Abstract

The purpose of this study is to examine the impact of auditor’s social network on the readability of key audit matters (KAMs) disclosure in Taiwan listed companies from 2016 to 2021. The empirical results suggest that auditors participating more in CPA associations and social organizations tend to reveal more readable KAMs. Although the non-big4 KAMs reporting is less readable than big 4 auditors, however, the non-big4 participating more in social networks, the readability of KAMs disclosure can...

Abstract

We investigate the impact of dividend tax capitalization on stock prices by the event of the 2001 repeal of Article 238 of the Taiwan Company Act. This regulatory change required firms to decide whether to transfer capital reserves to retained earnings, effectively increasing their ability to pay cash dividends while holding other financial factors, such as profitability, cash flow, and financial health, constant. Our findings reveal a negative stock price reaction during the period surrounding ...