KEY AUDIT MATTERS AND THEIR CONSEQUENCES FOR FIRMS AND CAPITAL MARKETS
DOI:
https://doi.org/10.5281/zenodo.23307851Abstract
The thesis analyses Key Audit Matters (KAMs), introduced by International Standard on Auditing 701, and their consequences for firms and capital markets. Its aim is to assess the firm-level and marketlevel effects of KAM disclosure based on the international research literature. The findings show that KAMs increase management attention to risk, strengthen internal controls, and intensify dialogue between auditors and management. Evidence on capital markets is mixed: experimental studies document effects on investor judgments, whereas archival studies often find no significant market reaction. Risks such as boilerplate wording, information overload, and limited readability are also identified. The author concludes that the effectiveness of KAMs depends on how auditors formulate them and offers related recommendations.Keywords
key audit matters, ISA 701, auditor’s report, audit quality, capital markets, transparencyReferences
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