The Relationship Between Key Audit Matters (KAMS) Disclosure and Stock Reaction: Cross-Sectional Study of Thailand, Malaysia, and Singapore

Abstract

Objective – The study aimed (1) to investigate the level and issue of key audit matters (KAMs) disclosure of listed companies in Thailand, Malaysia, and Singapore, (2) to test the different level of KAMs disclosure of listed companies between Thailand, Malaysia, and Singapore, and (3) to examine the relationship between KAMs disclosure and stock reaction. Methodology/Technique – Samples were 96 listed companies of Top-50 firms from Thailand, Malaysia, and Singapore. Content analysis by word counting and checklist was used to quantify KAMs disclosure in audit reports during 2016 to 2019, while the stock reaction was measured by the stock price of the sample’s common share. Descriptive analysis, independent sample t-test, correlation matrix, and multiple regression was used to analyze the data. Findings – As the results, the study found that the average word of KAMs the disclosure was 878.74 words with 2.38 average issues during 2016 to 2019. There was a significantly different level of KAMs disclosure of listed companies between Thailand and Malaysia, between Thailand and Singapore, and between Malaysia and Singapore. Moreover, the study found a positive significant relationship between KAMs disclosure (Word) and the stock price, while there was a negatively significant relationship between KAMs disclosure (Issue) and the stock price. Novelty – This study is the first cross-sectional study of KAMs disclosure in ASEAN region. Type of Paper: Empirical Keywords: Key Audit Matters Disclosure; Stock Reaction; Thailand; Malaysia; Singapore. Reference to this paper should be made as follows: Sawangjan, P; Suttipun, M. (2020). The relationship between key audit matters (KAMs) disclosure and stock reaction: Cross-sectional study of Thailand, Malaysia, and Singapore, J. Fin. Bank. Review, 5 (3): 70 – 77. https://doi.org/10.35609/jfbr.2020.5.3(1) JEL Classification: M40, M41, M42.