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oai:docta.ucm.es:20.500.14352/1301222026-01-14T08:39:24Zcom_20.500.14352_14col_20.500.14352_15

00925njm 22002777a 4500 dc Muñoz Izquierdo, Nora author Jiménez Mazarío, José Manuel author Camacho Miñano, Juana María Del Mar author 2023-05-17 We examine whether expanded audit report (EAR) disclosures classified as the audit opinion, going concern uncertainty paragraphs (GCUPs), emphasis of matter paragraphs (EMPs) and key audit matters (KAMs) are associated with the determinants of zombie firms. Theoretically, zombies are inefficient, unprofitable and highly leveraged firms that receive subsidized credit and consume resources that should be allocated to more efficient firms, reducing productivity growth in the economy. Using a sample of Spanish firms during 2017, the period in which the expanded audit standards were implemented, univariate analysis produces support for our expectations, suggesting that zombies are smaller and more indebted, tend to report losses and have EARs that include more disclosures than non-zombies. Our regression results indicate that GCUPs, EMPs, going concern KAMs and KAMs related to the valuation of current assets are more likely to be reported for zombies. Furthermore, the economic significance of GCUPs allows us to offer a new classification of zombies, contributing to zombie theory. To the best of our knowledge, this is the first study on the identification of zombie firms using external audit data and the first to analyze other EAR disclosures apart from KAMs. Our findings may have relevant implications for financial statement users, audit firms, standard setters, financial institutions and governments regarding the usefulness and zombie explanatory ability of EARs. Muñoz-Izquierdo, N., Mazarío, J.M.J. & Camacho-Miñano, M.M. (2024) Zombie firms and disclosures in the expanded audit report. Rev Manag Sci 18, 1519–1555 (2024). https://doi.org/10.1007/s11846-023-00666-5 1863-6683 1863-6691 10.1007/s11846-023-00666-5 https://hdl.handle.net/20.500.14352/130122 https://doi.org/10.1007/s11846-023-00666-5 Zombie firms and disclosures in the expanded audit report