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Contagion or Competition: Going Concern Audit Opinions for Real Estate Firms

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Author Info

  • R. Elliott

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  • Michael Highfield

    ()

  • Mark Schaub

    ()

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    Abstract

    We examine whether intra–industry information transfers from going–concern audit opinion announcements create contagion or competitive stock price reactions for other real estate firms operating in the same line of business. Using returns from publicly-traded land subdivision/development firms and Real Estate Investment Trusts, we find modest evidence supporting a competitive effect among rival firms as a result of another real estate firm announcing the receipt of a Going Concern Opinion (GCO) from its independent auditors. Copyright Springer Science + Business Media, LLC 2006

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    File URL: http://hdl.handle.net/10.1007/s11146-006-6961-x
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    Bibliographic Info

    Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

    Volume (Year): 32 (2006)
    Issue (Month): 4 (June)
    Pages: 435-448

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    Handle: RePEc:kap:jrefec:v:32:y:2006:i:4:p:435-448

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    Web page: http://www.springerlink.com/link.asp?id=102945

    Related research

    Keywords: Going concern opinions; Contagion effect; Competitive effect;

    References

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    1. Jacklin, Charles J & Bhattacharya, Sudipto, 1988. "Distinguishing Panics and Information-Based Bank Runs: Welfare and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 568-92, June.
    2. Boehmer, Ekkehart & Masumeci, Jim & Poulsen, Annette B., 1991. "Event-study methodology under conditions of event-induced variance," Journal of Financial Economics, Elsevier, vol. 30(2), pages 253-272, December.
    3. Gay, Gerald D & Timme, Stephen G & Yung, Kenneth, 1991. "Bank Failure and Contagion Effects: Evidence from Hong Kong," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 14(2), pages 155-65, Summer.
    4. Cheng, Louis T W & McDonald, James E, 1996. "Industry Structure and Ripple Effects of Bankruptcy Announcements," The Financial Review, Eastern Finance Association, vol. 31(4), pages 783-807, November.
    5. Schipper, Katherine & Smith, Abbie, 1983. "Effects of recontracting on shareholder wealth : The case of voluntary spin-offs," Journal of Financial Economics, Elsevier, vol. 12(4), pages 437-467, December.
    6. McConnell, John J. & Muscarella, Chris J., 1985. "Corporate capital expenditure decisions and the market value of the firm," Journal of Financial Economics, Elsevier, vol. 14(3), pages 399-422, September.
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    Cited by:
    1. Luís M. S. Coelho & Rúben M. T. Peixinho & Siri Terjensen, 2012. "Going concern opinions are not bad news: Evidence from industry rivals," Working Papers Department of Economics 2012/16, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
    2. Marilena Mironiuc & Ioan-Bogdan Robu & Mihaela-Alina Robu, 2011. """Going Concern"" And The Effects Of The Operational Cycle Management. An Empirical Study Concerning The Usage Of Financial Analysis For Obtaining Preliminary Proofs In The Task Of," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 2011, pages 41-53, july.
    3. Luís M.S. Coelho & Ruben M.T. Peixinho & Siri Terjensen, 2011. "The intraindustry effects of going concern audit reports," CEFAGE-UE Working Papers 2011_23, University of Evora, CEFAGE-UE (Portugal).

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