The Impact of Audit Committee Characteristics on the Number, Readability, and Tone of Key Audit Matters in the Audit Report

Zahra  Mashayekhpul; Razieh Alikhani; Mehdi  Maranjory; Reza   Fallah

Authors

Zahra Mashayekhpul Department of Accounting, Cha.C., Islamic Azad University, Chalus, Iran Author https://orcid.org/0009-0007-8422-3648
Razieh Alikhani Department of Accounting, Cha.C., Islamic Azad University, Chalus, Iran https://orcid.org/0000-0001-7637-6539
Mehdi Maranjory Department of Accounting, Cha.C., Islamic Azad University, Chalus, Iran Author https://orcid.org/0000-0002-9952-5020
Reza Fallah Department of Accounting, Cha.C., Islamic Azad University, Chalus, Iran Author https://orcid.org/0009-0004-8798-0191

Keywords:

Audit committee, Key Audit Matters, audit report readability, reporting tone, independent auditor’s report

Abstract

The objective of the present study was to examine the impact of audit committee characteristics on the number, readability, and tone of Key Audit Matters (KAMs) disclosed in the independent auditors’ reports of companies listed on the Tehran Stock Exchange. Audit committee characteristics included audit committee size, independence, financial expertise, gender diversity, experience, tenure, multiple directorships, overlapping memberships, and professional reputation. In terms of purpose, this study was applied research, and in terms of methodology, it employed a descriptive-correlational design based on ex post facto data. The statistical population consisted of companies listed on the Tehran Stock Exchange during the five fiscal years from 2020/2021 to 2024/2025. After applying the screening criteria, 114 companies and 570 firm-year observations were selected. The research data were collected from audit reports, financial statements, accompanying notes, information disclosed through the CODAL system, and Rahavard Novin software. Multiple regression models were estimated using EViews software to test the research hypotheses. The results indicate that certain audit committee characteristics can affect various dimensions of Key Audit Matter reporting. In particular, the professional and structural characteristics of audit committees play an important role in improving the quality of audit report content, enhancing readability, and moderating reporting tone. The findings suggest that strengthening audit committee effectiveness can contribute to greater transparency in auditors’ reports, reduced information asymmetry, and improved monitoring effectiveness within the corporate governance system.

References

[1] M. Elmarzouky, K. Hussainey, and T. Abdelfattah, "Key audit matters: A systematic review," International Journal of Accounting, Auditing and Performance Evaluation, vol. 20, no. 3/4, pp. 319-341, 2024, doi: 10.1504/IJAAPE.2024.138473.

[2] A. Vickneswaran, "A systematic literature review on determinants of key audit matters disclosure: An international perspective," International Journal of Disclosure and Governance, 2026, doi: 10.1057/s41310-026-00356-0.

[3] N. Muñoz-Izquierdo, M. J. Segovia-Vargas, M. d. M. Camacho-Miñano, and D. Pascual-Ezama, "Explaining the causes of business failure using audit report disclosures," Journal of Business Research, vol. 98, pp. 403-414, 2019, doi: 10.1016/j.jbusres.2018.07.024.

[4] Z. Heydari and S. Mashaeikh, "Consequences of key audit matters disclosure for investor judgment and decision-making," Empirical Accounting Research, vol. 15, no. 1, pp. 53-84, 2025. [Online]. Available: https://civilica.com/doc/2204749/.

[5] M. Ezadpanah and M. Sadeghi, "The effect of key audit matters on investor sentiment in companies listed on the Tehran Stock Exchange," Accounting and Auditing with Applications, vol. 3, no. 2, pp. 137-151, 2026, doi: 10.22105/aaa.v3i2.97.

[6] M. Hemmati and M. R. Khezripour, "The relationship between key audit matters disclosure and earnings ambiguity," Accounting and Management Perspectives, vol. 8, no. 102, pp. 95-105, 2025. [Online]. Available: https://www.jamv.ir/article_228183.html.

[7] M. Afkhami and N. Fazeli, "The effect of key audit matters disclosure in independent audit reports on audit fees and audit report delay," Professional Auditing Research, vol. 4, no. 15, pp. 8-29, 2024, doi: 10.22034/jpar.2024.2011171.1219.

[8] A. F. Mita and Y. D. Putra, "Understanding key audit matters: How readability boosts analyst forecast precision in Indonesia’s early implementation," International Journal of Auditing, vol. 30, no. 2, pp. 232-247, 2026, doi: 10.1111/ijau.70010.

[9] A. Tiron-Tudor, T. Porumbacean, D. Deliu, and O. C. Bunget, "Reading between the lines: The impact of key audit matters’ (KAMs) readability and informative value on audit reports in an emerging market," Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad, 2026, doi: 10.1080/02102412.2026.2613320.

[10] S. Küster, "The determinants of linguistic features in key audit matters: Empirical evidence from Europe," International Journal of Auditing, vol. 28, no. 3, pp. 582-614, 2024, doi: 10.1111/ijau.12344.

[11] S. Küster, T. Steindl, and M. Göttsche, "The informational content of key audit matters: Evidence from using artificial intelligence in textual analysis," Contemporary Accounting Research, vol. 42, no. 4, pp. 2392-2423, 2025, doi: 10.1111/1911-3846.13070.

[12] L. N. B. Yau, "Perceiving auditors’ tone," European Accounting Review, vol. 35, no. 1, pp. 1-34, 2026, doi: 10.1080/09638180.2025.2495017.

[13] N. Sultana, H. Singh, and A. Rahman, "Experience of audit committee members and audit quality," European Accounting Review, vol. 28, no. 5, pp. 947-975, 2019, doi: 10.1080/09638180.2019.1569543.

[14] M. M. Rahaman and M. R. Karim, "How do board features and auditor characteristics shape key audit matters disclosures? Evidence from emerging economies," China Journal of Accounting Research, vol. 16, no. 4, p. 100331, 2023, doi: 10.1016/j.cjar.2023.100331.

[15] M. Dastgir and N. S. Tabayi Aghdayi, "The impact of corporate sustainability performance on audit opinion, considering the role of audit committee independence in companies listed on the Tehran Stock Exchange," Accounting and Auditing with Applications, vol. 3, no. 2, pp. 103-122, 2026, doi: 10.22105/aaa.v3i2.95.

[16] P. F. Zhang and G. Shailer, "The impact of audit committee expertise on external auditors’ disclosures of key audit matters," International Journal of Auditing, vol. 26, no. 2, pp. 151-170, 2022, doi: 10.1111/ijau.12256.

[17] A. Aboud, H. Elbardan, M. El-Helaly, and A. Kotb, "Does the audit committee member’s accounting experience associated with key audit matter types?," Review of Quantitative Finance and Accounting, vol. 63, no. 2, pp. 753-780, 2024, doi: 10.1007/s11156-024-01276-2.

[18] S. Al-Asmakh, A. A. Elamer, and O. Uadiale, "Cultural dynamics and tenure trajectories: How auditor tenure and culture influence key audit matters in the GCC," Journal of Accounting Literature, vol. 48, no. 3, pp. 786-815, 2026, doi: 10.1108/JAL-04-2024-0081.

[19] A. A. Baba, L. S. Yekini, A. Owusu, and T. Adeyemi, "The impact of audit committee diversity on disclosure quality: A systematic literature review and future research agenda and suggestions," International Journal of Disclosure and Governance, 2026, doi: 10.1057/s41310-026-00383-x.

[20] M. Khatanlou, M. Abdi, and M. Kazemi Oloum, "The effect of audit firm partner gender diversity on key audit matters disclosure," Value and Behavioral Accounting, vol. 18, 2024.

[21] X. Lu, Z. Wu, L. Yu, and Y. Shi, "Audit committee-auditor interlocking and disclosure of key audit matters," Applied Economics Letters, vol. 32, no. 11, pp. 1583-1586, 2025, doi: 10.1080/13504851.2024.2308575.

[22] M. K. Bepari, "Audit committee characteristics and key audit matters (KAMs) disclosures," Journal of Corporate Accounting & Finance, vol. 34, no. 1, pp. 152-172, 2023, doi: 10.1002/jcaf.22587.

[23] N. Joudeh and S. Aqel, "Do audit firm and audit committee characteristics influence the reporting of key audit matters? Evidence from Palestine," Cogent Business & Management, vol. 11, no. 1, p. 2396537, 2024, doi: 10.1080/23311975.2024.2396537.

[24] M. Abu Alia, A. Dwekat, K. Shaar, A. Najjar, and L. Abu Ridah, "Unveiling the role of audit committees: How their characteristics shape key audit matters disclosure in the Middle East," International Journal of Disclosure and Governance, 2026, doi: 10.1057/s41310-026-00353-3.

[25] M. Hosseinniakani, C. Overland, and N. Samani, "Do key audit matters matter? Correspondence between auditor and management disclosures and the role of audit committees," Journal of International Accounting, Auditing and Taxation, vol. 55, p. 100617, 2024, doi: 10.1016/j.intaccaudtax.2024.100617.

[26] M. H. Ghaemi, M. Boraz, and M. Shahsavand, "Content and determinants of key audit matters disclosure: The first year of implementation of auditing standard 701 in Iran," Accounting and Auditing Review, vol. 31, no. 115, 2024, doi: 10.22059/acctgrev.2024.369541.1008892.

[27] H. Eskandar and A. Safdel, "The disclosure process of key audit matters in the auditor’s report: A grounded theory study," Empirical Accounting Research, vol. 14, no. 3, 2024.

[28] Z. Azarbayjani and H. Heydari Soltanabadi, "The impact of auditor and board characteristics on the disclosure of key matters in audit reports of firms listed on the Tehran Stock Exchange," presented at the Fourth International Conference on New Challenges and Solutions in Industrial Engineering, Management and Accounting, 2025.

[29] G. Mwintome, J. A. Agana, and S. Zamore, "Audit partner attributes and key audit matters readability," Journal of Applied Accounting Research, vol. 25, no. 3, pp. 623-649, 2024, doi: 10.1108/JAAR-01-2023-0009.