We examine whether the audit regulation of disclosing key audit matters (KAM) provides value-relevant information to short sellers as informed investors. The theoretical underpinning for examining short sellers' ability and incentives to use KAM disclosures in their stock valuation implications is based on a prediction theory and a skilled information processing theory of short sellers. Using a sample of expanded auditor's reports from UK-listed firms during the 2010–2017 period and hand-collecting a dataset of KAM disclosures, we find no evidence that the short interest is different for the period before than after the U.K.'s expanded auditor's report regulation. However, in our cross-sectional tests, we find that KAM disclosures have a marginal effect on short interest and a positive association between short interest and unexpected and severe KAM disclosures. We conclude that, except for severe KAM that is value-relevant to sophisticated investors, the disclosures in the expanded auditor's report have no valuation implications for short sellers. Our results are robust in examining the reactions of the financial market and analysts to KAM disclosures and addressing potential endogeneity concerns.

中文翻译：

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关键审计事项披露和知情交易者

我们研究披露关键审计事项（KAM）的审计规定是否为作为知情投资者的卖空者提供了与价值相关的信息。检验卖空者在其股票估值影响中使用 KAM 披露的能力和动机的理论基础是基于卖空者的预测理论和熟练的信息处理理论。使用 2010 年至 2017 年期间英国上市公司的扩展审计报告样本并手工收集 KAM 披露数据集，我们没有发现任何证据表明英国扩展审计报告监管之前和之后的时期的空头利息有所不同。然而，在我们的横断面测试中，我们发现 KAM 披露对空头利息有边际影响，并且空头利息与意外且严重的 KAM 披露之间呈正相关。我们的结论是，除了与成熟投资者价值相关的严重 KAM 之外，扩展审计报告中的披露对卖空者没有估值影响。我们的结果在检验金融市场和分析师对 KAM 披露的反应以及解决潜在的内生性问题方面是稳健的。