Do key audit matters impact financial reporting behavior?

Anna Gold*, Melina Heilmann, Christiane Pott, Johanna Rematzki

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


This study experimentally examines whether the implementation of key audit matters (KAMs) in auditors' reports affects managers' reporting behavior. In line with prior research in psychology, we argue that greater transparency through KAMs leads to higher accountability pressure as managers may expect their judgments to be scrutinized more strongly in the presence of KAMs and, hence, to an improvement of financial reporting quality. Further, we examine whether informational precision (firm-specific versus nonfirm-specific information) in a KAM section moderates the effect of KAM presence on reporting behavior. Our findings show that managers' tendency to make an aggressive financial reporting decision is reduced in the presence of KAMs (compared to the absence of KAMs). This effect remains even when the description of the KAM is of low informational precision. Thus, our results suggest that KAMs serve as a beneficial mechanism for enhancing financial reporting quality by attenuating aggressive financial reporting behavior, regardless of the precision employed by auditors.

Original languageEnglish
Pages (from-to)232-244
Number of pages13
JournalInternational Journal of Auditing
Issue number2
Early online date11 Feb 2020
Publication statusPublished - 11 Feb 2020


  • accountability
  • audit regulation
  • financial reporting behavior
  • informational precision
  • Key Audit Matters (KAMs)


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