The effect of key audit matters reviewing on loan approval decisions?

Abstract

The existing literature does not provide a definitive statement on whether the inclusion of Key Audit Matters (KAM) in accounting research increases the likelihood of loan approval by bank approvers. This study investigates the combined effects of approvers' trait skepticism, their professional background in accounting and auditing, as well as the familiarity and readability of KAM content, on loan approval probability. The findings indicate that an increased duration spent reading 'How' paragraph enhances the probability of loan approval by approvers. Moreover, this positive correlation is more pronounced for familiar and easily legible content, highly skeptical individuals, and those with expertise in accounting and auditing. These results offer novel insights and research perspectives for KAM while expanding upon the literature concerning factors influencing approvers' loan approvals.