Purpose This study examines whether Key Audit Matters (KAMs) convey value-relevant signals to investors and how this relationship is influenced by audit committee expertise and mediated by the strength of auditing and reporting standards within ASEAN capital markets. Design/methodology/approach Using a sample of non-financial firms listed in Indonesia, Malaysia, Thailand, Vietnam and the Philippines over the period 2015–2024, comprising 9,487 firm-year observations, this study employs panel regression analysis with robust standard errors to examine the market valuation effects of KAM disclosures. Findings The results show that KAM disclosures provide value-relevant information, indicating that investors perceive KAMs as credible audit signals regarding firms' underlying risks and financial reporting quality. Further analysis reveals that audit committee expertise positively moderates the relationship between KAM disclosures and firm value, suggesting that audit committees with stronger financial expertise enhance the interpretability and credibility of audit communications. In addition, the strength of auditing and reporting standards mediates the relationship between KAM disclosures and firm value, indicating that stronger institutional frameworks improve the effectiveness and consistency of audit reporting across ASEAN markets. Research limitations/implications These findings contribute to the literature on audit reporting transparency and corporate governance in emerging markets by highlighting the joint roles of internal governance mechanisms and external institutional environments in shaping the market relevance of audit disclosures. The results also provide practical implications for regulators and standard setters regarding the importance of strengthening auditing and reporting standards to enhance the informational value of audit reports. Practical implications The results provide important implications for regulators, audit standard setters, and corporate boards. Strengthening auditing and reporting standards can enhance the credibility and comparability of audit disclosures across capital markets, while firms should ensure that audit committees possess sufficient financial expertise to effectively interpret and communicate complex audit findings. Such governance capacity is essential to ensure that enhanced audit disclosures, such as KAMs, deliver meaningful information to investors. Originality/value This study extends prior research by integrating audit disclosure, corporate governance, and institutional quality perspectives to explain how KAM disclosures influence firm valuation in ASEAN capital markets.
Cahyono et al. (Mon,) studied this question.