Topic: Spillovers of Critical Audit Matters through Board Interlocks: Evidence from Investment Efficiency

Date and Time: 10:00–11:30, June 18, 2026

Venue: Room 245, Quanxue Building

Organizers: School of Accounting, Dongbei University of Finance and Economics; Liaoning Province Capital Market Finance and Accounting Graduate Innovation and Academic Exchange Center

Abstract: 

This study examines how Critical Audit Matter (CAM) disclosures affect the investment efficiency of firms connected through board interlock networks. Although CAM disclosures are intended to enhance audit transparency and inform directors about risk, we find that unexpected numbers of CAM disclosures by peer firms are associated with underinvestment in focal firms. This pattern appears to reflect a shift in directors’ attention toward monitoring activities, which can crowd out their advisory role in capital allocation decisions. The spillover effects are stronger for non-routine CAMs, CAMs with more risk-signaling language, and disclosures by industry leaders or firms with high analyst coverage. Moreover, the effects are amplified in firms with greater advising needs and more independent boards, and attenuated in firms with CEO-chairman duality. Overall, our findings highlight that while expanded audit reporting enhances risk awareness, it can also reshape board behavior in interconnected firms, with important implications for investment decisions and the governance consequences of audit transparency.

Introduction of Speaker:

 Tong LI, Ph.D. candidate at the College of Management and Economics, Tianjin University. His research interests include capital markets, accounting information disclosure and market microstructure, as well as big data and textual analysis. He has published nine papers in journals such as Annals of Operations Research, Economics Letters, International Journal of Finance & Economics, China Journal of Econometrics, Journal of Systems Management, and Operations Research and Management. He has received the National Scholarship for Ph.D. students and the Second Prize for outstanding paper at the 13th China Annual Conference on Investment. He has also presented working papers at academic conferences including the Asian Finance Association Annual Meeting, the China International Risk Forum, the China Annual Conference on Finance, and the Annual Symposium on Financial Systems Engineering and Risk Management. He currently serves as an anonymous reviewer for journals including the Journal of Alternative Investments, International Review of Economics and Finance, Journal of International Financial Management & Accounting, and China Finance Review International.