The impact of digital assets disclosure on stock prices: A mediating effect of key audit matters evidence from Egyptian listed companies

Abstract

Research objective: The purpose of this study is to investigate the influence of digital asset disclosure on stock prices in the presence of the moderating role of key audit matters (KAM). The current study adds to the literature since it is one of the pioneers of this stream of research that addresses how digital currencies affect accounting, auditing, and financial reporting. Despite the researches’ conviction that regulators should respond to these changes and effect on accounting and auditing fields. Currently, there are no accounting standards nor pronouncements that provide clear and solid guidelines on the recognition and measurement of digital assets.

Research Methodology: The study sample spans via the years 2020-2022 for all listed Egyptian firms dealing with digital assets. Taking into consideration assumptions of conducting the research, the final sample of current study comprises 159 firm. The current study regresses the firms’ performance measured by stock prices on the study variables, i.e. disclosure of digital assets, Key Audit Matters, and the moderating role of the later variable in the presence of the former.  after controlling for the variables that may affect this relationship, i.e. firm Size, leverage, profitability, and trading volume.

Results & Recommendations: Three results of the current study are found, the results are conclusive. First, digital assets that must be recognized, measured, classified and disclosure within the financial statements or in the supplementary clarifications, has significant positive impact on the market value of the stock prices of firms listed on the stock exchange. Second, Disclosure of the digital assets has significant positive effect on the stock price. Third, Key Audit Matters have significant positive impact on the stock price in the presence of digital assets’ disclosure referring to its moderating effect on the firm performance. The current study recommends regulators to develop an international audit standard that includes the steps and procedures for the digital asset audit process, conducting further research on the relationship between accounting disclosure of digital assets and financial risk management.