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Does a Manager Respond to a Going-Concern Audit Opinion with an Asymmetry in Gain and Loss?

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  • Taewoo Kim

    (Department of Accounting and Finance, Jack H. Brown College, California State University San Bernardino, San Bernardino, CA 92407, USA)

Abstract

In this paper, I investigate the relationship between previous going-concern audit opinions and subsequent asymmetric timeliness in accounting. Using the time-series and price-based models and conservatism proxy, I find that firms with going-concern audit opinions subsequently report losses in a more timely manner than firms that did not receive going-concern audit opinions. Furthermore, I also find that firms exiting going-concern audit opinions are more likely to report losses rather than gains in a timely manner, compared to firms non-exiting from going-concern opinions. This study extends the prior research by exploring the association between going-concern opinions and accounting conservatism from the perspective of client firms—that is, how firms behave strategically and conservatively to bypass going-concern opinions, once the firms had received previous going-concern opinions.

Suggested Citation

  • Taewoo Kim, 2021. "Does a Manager Respond to a Going-Concern Audit Opinion with an Asymmetry in Gain and Loss?," Sustainability, MDPI, vol. 13(8), pages 1-18, April.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:8:p:4425-:d:536926
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    References listed on IDEAS

    as
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