Effects of Attribution and Auditors' Response Readability of Critical Audit Matter on Audit Quality Perceptions and Valuation Judgements

Publication Date

2-5-2026

Document Type

Article

Publication Title

Accounting and Finance

DOI

10.1111/acfi.70186

Abstract

We investigate how Critical Audit Matter (CAM) attribution and auditors' response readability influence investors' perceptions of audit quality and their valuation revision judgements. Using an experiment with nonprofessional investors, we find that investors perceive the highest audit quality when auditors attribute CAMs to management and provide more readable responses. In addition, given a more readable response, CAM attribution to management leads to more negative valuation revisions than attribution to the nature of accounts through a positive indirect effect and a negative direct effect. Our study contributes to the recent CAM literature and provides implications for regulators, auditors, and investors.

Keywords

attribution, audit quality, critical audit matter, readability, valuation

Department

Accounting and Finance

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