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Informativeness Of The Expanded Audit Report: Evidence From China, Beng Wee Goh, Jimmy Lee, Dan Li, Muzhi Wang

Research Collection School Of Accountancy

This study investigates whether the expanded audit report is informative to investors in the setting of an emerging economy. Using the recent staggered adoption of the expanded audit report for A+H and A share firms in China, we find robust evidence that abnormal trading volume and earnings response coefficients are higher, and stock price synchronicity are lower, in the post-adoption periods than in the pre-adoption periods. In additional tests, we find that the expanded audit report is more informative for non-State Owned Enterprises and for firms with higher information asymmetry. Overall, our study documents systematic evidence that the expanded audit …