Skip to search boxSkip to navigationSkip to main content

Reducing Risk by Understanding the Interplay of Critical Audit Matters and Culture

*Corresponding author for this work
Scholary Output:
Contribution to journal
Article
Peer-review

Open access

Abstract

Prior research has called for the need to investigate how national cultural values can affect accountants’ interpretations of accounting standards. We focus on CAMs because they serve an important monitoring function, instilling credibility, trust, and confidence in the financial statements of emerging and international entities. Using a robust fixed effects regression on a sample of 1387 CAMs from companies who are listed on a US stock exchange with a non-US audit firm (2019–2021), we find that the number of CAMs reported is positively (negatively) associated with individualism and uncertainty (power distance). We also find a positive association between the strength of investor protections and the number of CAMs. Next, we find similar relationships between language (as proxied by the FOG Index) and the three measures of national culture. These findings contribute to the literature focusing on how the interplay of CAMs and culture can help investors manage investment risk.

Publication Information

Output type

Scholary Output:
Contribution to journal
Article
Peer-review

Original language

English (US)

Article number

117

Journal (Volume, Issue Number)

Journal of Risk and Financial Management (Volume 18, Issue 3)

Publication milestones

  • Published - 03/2025

Publication status

Published - 03/2025

ISSN

1911-8066

Publication IDs

  • Scopus: 105001150953

Publication metrics

Metrics

Fractional count
1
Fractional count
0.33
Fractional count
2
Fractional count
0.67
Fractional count
1
Fractional count
1

PlumX, opens in new tab

Captures
8
Mentions
1