Journal of Applied Finance & Banking

Does Using the Extended Audit Report Decrease Information Asymmetry in Family Firms?

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• Abstract

   

  The purpose of this study is to examine impact of using the extended audit report (EAR) on the information asymmetry that exists among the shareholders of family firms as compared to non-family firms during the period surrounding the announcement of an audit report. The results show that the adoption of the EAR alleviates the problem of information asymmetry related to family firms. Furthermore, the results show that the inclusion of key audit matters in audit reports also decreases the information asymmetry related to family firms.

   

  JEL classification numbers: G32, M42.

  Keywords: Extended Audit Report, Information Asymmetry, Family Firm.