Type 2 diabetes (T2DM) is a well known risk factor for Alzheimer’s disease. Mitochondria are the center of intracellular energy metabolism and the main source of reactive oxygen species. Mitochondrial dysfunction has been identified as a key factor in diabetes-associated brain alterations contributing to neurodegenerative events. Defective insulin signaling may act in concert with neurodegenerative mechanisms leading to abnormalities in mitochondrial structure and function. Mitochondrial dysfunction triggers neuronal energy exhaustion and oxidative stress, leading to brain neuronal damage and cognitive impairment. The normality of mitochondrial function is basically maintained by mitochondrial quality control mechanisms. In T2DM, defects in the mitochondrial quality control pathway in the brain have been found to lead to mitochondrial dysfunction and cognitive impairment. Here, we discuss the association of mitochondrial dysfunction with T2DM and cognitive impairment. We also review the molecular mechanisms of mitochondrial quality control and impacts of mitochondrial quality control on the progression of cognitive impairment in T2DM.
Purpose
In an effort to make audit reports more informative to users, the Public Company Accounting Oversight Board and the International Auditing and Assurance Standards Board adopted a standard that requires auditors to disclose key audit matters (KAMs). This paper aims to explore the impact of the risk information provided by KAMs on corporate debt contracting.
Design/methodology/approach
In China, the KAM standard went into effect for A + H cross-listing companies in 2017 and became mandatory for all listed companies in 2018. This study takes this as an exogenous shock to examine the impact of the KAM disclosures on debt contracting. This study also designs a path analysis to open the “black box” between the risk information in KAMs and the risk perception of creditors. Moreover, This study conducts a textual analysis on the KAMs information based on samples after the release of the KAM standard.
Findings
This study conducts difference-in-difference tests and find that the KAM disclosures decrease interest rates and increase the proportion of long-term debt. Path analyses reveal that the KAM disclosures lead to more favorable debt characteristics through decreasing information asymmetry. This study also finds that the more KAMs are disclosed, the more favorable debt characteristics are and that different categories of KAMs have different effects on debt contracting.
Originality/value
This paper highlights the benefits of KAM disclosures, which are consistent with the convergence argument of risk information disclosures. Investors’ reactions to KAMs are mixed because of the differences in how professional investors and nonprofessional investors interpret information. This study provides evidence of incrementally informative nature of KAMs from the perspective of debt holders, who are professional information users.
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