Key Audit Matters, Readability and Greenwashing Effect: An Exploration from Indonesia and Malaysia

Greenwashing has become a critical concern in corporate sustainability reporting, particularly in emerging markets characterized by high information asymmetry. This study examines whether the readability of Key Audit Matters (KAMs) disclosures serves as an effective governance mechanism in mitigating corporate greenwashing. Using a sample of non-financial listed firms in Indonesia and Malaysia from 2020 to 2024, comprising 5720 firm-year observations, we employ panel data regression analysis to investigate the relationship between KAM readability and greenwashing practices. The findings indicate that higher KAM readability is significantly associated with lower levels of greenwashing, suggesting that clearer audit communication enhances transparency and strengthens external monitoring. These results highlight the importance of communicative and accessible KAM disclosures beyond formal compliance. The study contributes to the literature on audit reporting and sustainability governance by demonstrating the role of audit disclosure quality in improving the credibility of sustainability reporting in emerging markets. Practical implications are relevant for regulators, auditors, and firms seeking to enhance reporting integrity and reduce opportunistic sustainability disclosure.