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Non‐GAAP earnings reporting following going‐concern opinions

Author

Listed:
  • Ting Zhang
  • So Yean Kwack
  • Yi Si
  • Gaoliang Tian

Abstract

We examine non‐GAAP earnings reporting following a going‐concern audit opinion (GCO). Using a propensity score‐matched sample, matching first‐time going‐concern issuing companies with firms in financial distress that did not receive a going‐concern report, we find that the likelihood and frequency of non‐GAAP earnings reporting are lower following GCOs. In additional analyses, we find the negative association between the announcement of GCOs and the likelihood and frequency of non‐GAAP earnings reporting stronger when GCOs are issued by industry‐specialist auditors and when GCOs are unexpected, but do not find litigation risk or managers' ability to affect the association. These results are consistent with a decrease in investor demand for non‐GAAP earnings disclosures following GCOs.

Suggested Citation

  • Ting Zhang & So Yean Kwack & Yi Si & Gaoliang Tian, 2023. "Non‐GAAP earnings reporting following going‐concern opinions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3217-3252, September.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:3:p:3217-3252
    DOI: 10.1111/acfi.13028
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