CRITICAL AUDIT MATTER PERSISTENCE AND FUTURE REPORTING AMENDMENTS: EVIDENCE FROM U.S. 10-K FILINGS
DOI:
https://doi.org/10.35631/AIJBAF.824001Keywords:
10-K/A Amendments, Critical Audit Matters, Financial Reporting Quality, SEC Filings, Textual PersistenceAbstract
Critical audit matters are usually read as annual audit-report disclosures. This paper asks whether their wording also matters across years. Using U.S. S&P 500 non-financial firms from 2020 to 2024, CAM persistence is measured as the TF-IDF cosine similarity between adjacent-year CAM sections in original 10-K filings. Future 10-K/A amendments are used as the subsequent reporting outcome, not as evidence of fraud or severe restatement in every case. Firms with more persistent CAM language are more likely to file a future 10-K/A amendment. The association remains after controlling for acquisition-related complexity and internal-control weakness and is supported by bootstrap evidence. Repeated CAM wording is therefore not necessarily empty boilerplate; in some cases, it may point to reporting issues that have not fully cleared.
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