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Does increased monitoring enhance the credibility of financial reports? Evidence of auditing semi‐annual financial statements

Author

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  • Hui‐Yu Hsiao
  • Wu‐Po Liu
  • Szu‐Jung Wu

Abstract

Due to several financial scandals of Taiwan‐listed foreign firms (known as KY firms), the Taiwan Financial Supervisory Commission requires KY firms to disclose audited semi‐annual financial statements, which were reviewed before. Using the event study, we find higher cumulative abnormal returns for KY firms around the regulation announcement, suggesting the market's positive attitude towards the increase in the assurance level of semi‐annual financial statements. In addition, we apply a difference‐in‐differences test and find the improvement in earnings response coefficients, showing the market's increased perception of audit quality. Our findings should be of interest to regulators, practitioners, and researchers.

Suggested Citation

  • Hui‐Yu Hsiao & Wu‐Po Liu & Szu‐Jung Wu, 2025. "Does increased monitoring enhance the credibility of financial reports? Evidence of auditing semi‐annual financial statements," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(1), pages 753-772, March.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:1:p:753-772
    DOI: 10.1111/acfi.13347
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    References listed on IDEAS

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