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Abstract

This study examines how external auditor experience and compensation affect the quality of Key Audit Matter (KAM) disclosures among listed companies in Tanzania, and examines the moderating role of the audit committee financial expertise in these relationships. The study analysed a total of 132 firm-year observations of companies listed on the Dar es Salaam Stock Exchange (DSE) from 2017 to 2024, based on the criteria of consistent listing and annual report publication over the study period. Data was analyzed using a panel FGLS regression. The findings show that audit firm tenure, audit fee, and audit committee financial expertise have a significant positive influence on KAMs disclosure. This suggests that longer auditor relationships and higher audit fees may lead to more extensive KAMs disclosures, while an audit committee with a high proportion of financial experts provides better oversight. Conversely, audit firm age has a significant negative influence on KAMs disclosure, indicating that older firms may not necessarily provide more comprehensive disclosures. The results also reveal that audit committee financial expertise significantly and positively strengthens the influence of audit fees on KAMs disclosure, as well as the influence of audit firm tenure on KAMs disclosure. Furthermore, it amplifies the negative influence of audit firm age on KAMs disclosure. The findings highlight the critical role of audit committee financial expertise in enhancing audit quality and transparency in the Tanzanian context by ensuring that external auditor attributes translate into meaningful disclosures. This study's findings are significant for informing policy reforms, strengthening investor decision-making, and guiding companies in selecting auditors who uphold rigorous and transparent audit practices. The study contributes to the literature by providing empirical evidence on the influence of external auditor attributes on KAMs disclosure and the specific moderating role of audit committee financial expertise within the context of publicly listed firms in Tanzania, a previously underexplored area.

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