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Effect of auditing: evidence from variability of stock returns and trading volume

Chen, Charles JP, Srinidhi, Bin and Su, Xijia 2014, Effect of auditing: evidence from variability of stock returns and trading volume, China journal of accounting research, vol. 7, no. 4, pp. 223-245, doi: 10.1016/j.cjar.2014.11.002.

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Title Effect of auditing: evidence from variability of stock returns and trading volume
Author(s) Chen, Charles JP
Srinidhi, Bin
Su, Xijia
Journal name China journal of accounting research
Volume number 7
Issue number 4
Start page 223
End page 245
Total pages 23
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2014-12
ISSN 1755-3091
Keyword(s) auditing
inter-investor divergence
variability of stock returns
trading volume
Summary Although the benefits of auditing are uncontroversial in developed markets, there is scant evidence about its effect in emerging economies. Auditing derives its value by increasing the credibility of financial statements, which in turn increases investors’ reliance on them in developed markets. Financial statement information is common to all investors and therefore increased reliance on it should reduce divergence in investors’ assessment of firm value. We examine the effect of interim auditing on inter-investor divergence with a large sample of listed Chinese firms and find that it decreases more for firms whose reports are audited compared to non-audited firms. This finding suggests that investors rely more on audited financial information. Results of this study are robust to variations in event window length and specification of empirical measures.
Language eng
DOI 10.1016/j.cjar.2014.11.002
Field of Research 1501 Accounting, Auditing And Accountability
1502 Banking, Finance And Investment
1801 Law
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2014, Sun Yat-sen University
Free to Read? Yes
Use Rights Creative Commons Attribution Non-Commercial No-Derivatives licence
Persistent URL http://hdl.handle.net/10536/DRO/DU:30106686

Document type: Journal Article
Collections: Open Access Collection
Department of Accounting
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.