---

Author(s): James Imoter Tyungu, Kwaghfan Aondoakaa (Ph.D.), Paul Aondona Angahar (Prof.).

Volume/Issue: Volume 9, Issue 1 (2026)

Page No: 118-133

Journal: African Journal of Accounting and Financial Research (AJAFR)

---

Abstract:

This study investigates the effect of Key Audit Matters (KAMs) disclosure on the trading volume of listed Deposit Money Banks (DMBs) in Nigeria. Adopting an ex-post facto research design, panel data were collected from 12 DMBs over a 16-year period (2009–2024), covering both pre-KAM (2009–2016) and post-KAM (2017–2024) regimes. KAM disclosures were extracted from audited financial statements using a standardized checklist across three dimensions: Related-Party Transactions Disclosure (RPTD), Liquidity Risk Management Disclosure (LQRD), and Capital Adequacy Disclosure (CAPD). A mixed-effects regression model with Restricted Maximum Likelihood (REML) estimation was employed to assess the effect of these disclosures on trading volume. The results reveal that LQRD had a significant positive effect on trading activity, suggesting investor responsiveness to liquidity transparency. CAPD had a significant negative effect, indicating cautious market reactions to solvency disclosures. RPTD was statistically insignificant, reflecting weak short-term investor response. These findings indicate that the impact of KAMs on market activity is contingent on the nature and perceived relevance of the disclosure. The study recommends that regulators enforce clarity and materiality in KAM reporting to enhance market engagement. It contributes to audit transparency literature and informs capital market policy reforms in emerging economies.

Keywords:

Key Audit Matters (KAMs), Liquidity Risk Management, Capital Adequacy, Related-Party Transactions, Trading Volume.

No. of Downloads: 0