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Management Going-concern Disclosures: Impact of Corporate Governance and Auditor Reputation


  • Jinn-Yang Uang
  • David B. Citron
  • Sudi Sudarsanam
  • Richard J. Taffler


"The UK regulatory requirements relating to going-concern disclosures require directors to report on the going-concern status of their firms. Such directors have incentives not to report fairly in the case of financially-distressed firms. We expect effective corporate governance mechanisms will encourage directors to report more truthfully in such situations. This paper tests this proposition explicitly using a large sample of going-concern cases over the period 1994-2000. We find that whereas auditors' going-concern opinions predict the subsequent resolution of going-concern uncertainties directors' going-concern statements convey arbitrary and unhelpful messages to users. However, robust corporate governance structures and high auditor reputation constrain directors to be more truthful in their going-concern disclosures, bringing these more into line with the more credible auditor opinions." Copyright 2006 The Authors Journal compilation (c) 2006 Blackwell Publishing Ltd.

Suggested Citation

  • Jinn-Yang Uang & David B. Citron & Sudi Sudarsanam & Richard J. Taffler, 2006. "Management Going-concern Disclosures: Impact of Corporate Governance and Auditor Reputation," European Financial Management, European Financial Management Association, vol. 12(5), pages 789-816.
  • Handle: RePEc:bla:eufman:v:12:y:2006:i:5:p:789-816

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    Cited by:

    1. Price, S. McKay & Doran, James S. & Peterson, David R. & Bliss, Barbara A., 2012. "Earnings conference calls and stock returns: The incremental informativeness of textual tone," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 992-1011.
    2. James Doran & David Peterson & S. Price, 2012. "Earnings Conference Call Content and Stock Price: The Case of REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 45(2), pages 402-434, August.
    3. 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.
    4. Waymond Rodgers & Andrés Guiral & José Gonzalo, 2009. "Different Pathways that Suggest Whether Auditors’ Going Concern Opinions are Ethically Based," Journal of Business Ethics, Springer, vol. 86(3), pages 347-361, May.
    5. Antony Young & Yi Wang, 2010. "Multi-risk level examination of going concern modifications," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(8), pages 756-791, September.
    6. repec:wsi:apjorx:v:34:y:2017:i:02:n:s021759591740019x is not listed on IDEAS

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