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Do Auditors Start the Clock? First‐Time Going Concern Opinions and Time to Bankruptcy

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  • James Routledge

Abstract

Going concern audit opinions (GCOs) alert stakeholders to substantial doubt about a firm's ability to continue operating. While prior research has examined the value of GCOs as predictors of bankruptcy, this study examines whether they influence the timing of bankruptcy. The survival analysis results for a sample of Australian public companies that entered bankruptcy administration show that the issuance of a first‐time GCO is associated with a significantly shorter time to bankruptcy. In contrast, repeat GCOs do not have a significant timing effect. The impact of first‐time GCOs is strongest when the opinion is unexpected and for audits conducted by Big 4 firms. These findings are consistent with first‐time GCOs prompting stakeholder responses that shorten the time to bankruptcy.

Suggested Citation

  • James Routledge, 2026. "Do Auditors Start the Clock? First‐Time Going Concern Opinions and Time to Bankruptcy," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(2), pages 1401-1411, June.
    • Handle: RePEc:bla:acctfi:v:66:y:2026:i:2:p:1401-1411
    DOI: 10.1111/acfi.70178
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