The Impact of Key Audit Matters Disclosure on Share Price: A Moderating Role of Industry Competitiveness in Malaysia

Abstract

This study investigates the relationship between key audit matters (KAM) disclosure and share price, as well as the influence of industry competitiveness on this relationship. Using a panel dataset of 931 observations of firm-years from Bursa Malaysia spanning 2016 to 2019, it was revealed that investors consider not only the quantity but also issues disclosed by auditors in KAM disclosure. Furthermore, KAM disclosure was seen to positively impact share prices in oligopoly industries but negatively affect companies in competitive markets. This study makes a novel contribution by investigating how industry competitiveness moderates the relationship between KAM disclosure and share price. The findings highlight the significance placed by investors on KAM disclosure in competitive markets, offering implications for investment decision-making. Nonetheless, this study acknowledges inherent limitations in its scope, particularly its limitation to Malaysia, which suggests caution in generalising findings to other countries.