Consequences of Expanded Audit Reports: Evidence from the Justifications of Assessments in France

AUDITING: A Journal of Practice & Theory, DOI 10.2308/ajpt-52339

55 Pages Posted: 15 May 2018 Last revised: 1 May 2019

See all articles by Jean Bédard

Jean Bédard

Université Laval - École de comptabilité

Nathalie Gonthier‐Besacier

University Grenoble Alpes

Alain Schatt

University of Lausanne, HEC-Lausanne; Université de Bourgogne - Finance

Date Written: November 20, 2018

Abstract

Since 2003, French auditors must disclose justifications of assessments (JOAs) in expanded audit reports. Like critical audit matters recently introduced in the US and key audit matters introduced by international standard setters, the purpose of JOAs is to enhance the informative value of audit reports. Based on French audit reports issued from 2002 to 2011, we analyze the impact of first-time implementation of JOAs, and the impact of new JOAs in subsequent years, on investors (measured by abnormal returns and abnormal trading volume) and on the audit (measured by audit report lag, abnormal accruals, and audit fees). For both first-time implementation of JOAs and new JOAs in subsequent years we find no significant market reaction to their disclosure and no significant effect on audit report lag, audit quality and audit fees. Overall, our results suggest that the French expanded audit report did not have the expected consequences on investors and the audit.

Keywords: Audit Report, Justifications of Assessments, France, Market Reaction, Audit Qualility, Audit Fees, Audit Delay

JEL Classification: M42, G12

Suggested Citation

Bédard, Jean and Gonthier‐Besacier, Nathalie and Schatt, Alain and Schatt, Alain, Consequences of Expanded Audit Reports: Evidence from the Justifications of Assessments in France (November 20, 2018). AUDITING: A Journal of Practice & Theory, DOI 10.2308/ajpt-52339, Available at SSRN: https://ssrn.com/abstract=3175497 or http://dx.doi.org/10.2139/ssrn.3175497

Jean Bédard (Contact Author)

Université Laval - École de comptabilité ( email )

2325, rue de la Terrasse
Québec, Québec G1V 0A6
Canada
418-656-7055 (Phone)
418-656-2624 (Fax)

Nathalie Gonthier‐Besacier

University Grenoble Alpes ( email )

France

Alain Schatt

University of Lausanne, HEC-Lausanne ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Université de Bourgogne - Finance ( email )

United States

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