The Impact of Bankruptcy Code on the Value of the Auditor's Going-Concern Opinion to Investors

2006 ◽  
Author(s):  
Asad Kausar ◽  
Richard J. Taffler ◽  
Christine Tan
Keyword(s):  
Going Concern ◽  
Going Concern Opinion ◽  
Bankruptcy Code ◽  
The Impact

scholarly journals PENGARUH PENERAPAN GOOD CORPORATE GOVERNANCE, OPINION SHOPPING, KUALITAS AUDIT, DAN AUDIT CLIENT TENURE TERHADAP PENERIMAAN OPINI AUDIT GOING CONCERN AUDITING

2019 ◽  
Vol 2 (2) ◽  
Author(s):  
Panggah Wira Angkasa ◽  
Dewi Indriasih ◽  
Baihaqi Fanani
Keyword(s):  
Logistic Regression ◽  
Research Result ◽  
Institutional Ownership ◽  
Audit Opinion ◽  
Quality Audit ◽  
Going Concern ◽  
Opinion Shopping ◽  
Going Concern Opinion ◽  
Infrastructure Services ◽  
The Impact

The Impact of Good Governance, Opinion Shopping, Quality Audit and Audit Client Tenure Application towards Going Concern Opinion Audit Acceptance (Empirical Studies on Infrastructure Services Company, Utility, and Transportation which Registered at Indonesian Stock Exchange (ISE) during 2013 – 2017 Period). Essay. Tegal: Economic & Business Faculty, Pancasakti University Tegal. 2018. The aim of this research is to finding out the impact of institutional ownership, independent commissioner, committee audit, opinion shopping, quality audit, audit client tenure towards going concern’s opinion audit on infrastructure services company, utility, and transportation which registered at ISE during 2013 – 2017 period. The population in this research are infrastructure services company, utility, and transportation which registered at ISE during 2013 – 2017 period and the sample determination by using purposive sampling method, so within the result obtained 15 company’s samples. The data analysis method used is logistic regression analysis. Based on logistic regression analytic, the research result concluded that institutional ownership (0,109), audit committee (0,429), opinion shopping (0,607), and quality audit (0,998) are not affecting the going concern opinion audit. Meanwhile, the independent commissioner (0,006), and audit client tenure (0,004) are affecting the going concern opinion audit. Keywords: going concern, opinion audit, institutional ownership, independent commissioner, committee audit, opinion shopping, quality audit, audit client tenure

scholarly journals The Impact of Bankruptcy Prediction, Company’s Financial Condition, Previous Year Audit Opinion, Firm Size and Audit Tenure Towards Auditor’s Going Concern Opinion

2016 ◽  
Vol 1 (1) ◽  
pp. 51-58
Author(s):  
Lisa Cellica ◽  
Ratnawati Kurnia
Keyword(s):  
Firm Size ◽  
Stock Exchange ◽  
Secondary Data ◽  
Jel Classification ◽  
Bankruptcy Prediction ◽  
Audit Opinion ◽  
Going Concern ◽  
Financial Condition ◽  
Going Concern Opinion ◽  
The Impact

Objective – The auditor is responsible for obtaining sufficient audit evidence about the accuracy and proper use of the going concern assumption from the company’s management through its financial statements. These evidence are used for the purpose of deciding whether there are material uncertainties about the entity's ability to maintain the continuity of its business. Thus, the objective of this paper is to examine the impact of bankruptcy prediction, company’s financial condition, previous year audit opinion, firm size and audit tenure towards Auditor’s going concern opinion. Methodology/Technique – The object of this paper is the service companies listed on the Indonesia Stock Exchange for the period of 2011-2014. This paper uses secondary data and samples taken were determined based on the purposive sampling method. The regression logistic is used to analyse data. Findings – The results of this research show that bankruptcy prediction, company’s financial condition, previous year audit opinion, firm size, and audit tenure all simultaneously, have a significant impact towards Auditor’s going concern opinion, particularly Previous Year Audit Opinion. Novelty – This paper provides insights into the factors affecting auditors in providing a going concern opinion in the case of Indonesian companies. Type of Paper: Empirical Keywords: Bankruptcy Prediction; Company’s Financial Condition; Previous Year Audit Opinion, Firm Size; Audit Tenure; Auditor’s Going Concern Opinion. JEL Classification: D81, M42.

scholarly journals The Effect of Financial Distress, Firm Growth, and Previous Year’s Opinion on The Firm’s Going Concern Opinion

2021 ◽  
Vol 58 (1) ◽  
pp. 247-258
Author(s):  
Amiruddin, Grace T. Pontoh, Marina Lauren
Keyword(s):  
Financial Distress ◽  
Firm Growth ◽  
Stock Exchange ◽  
Secondary Data ◽  
Substantial Impact ◽  
Audit Opinion ◽  
Going Concern ◽  
Service Companies ◽  
Going Concern Opinion ◽  
The Impact

This research aims to examine and determine the impact of financial distress, firm growth, and opinion on previous year to firms‘going concern. The study was carried on service companies that are listed on Indonesia Stock Exchange during 2015-2017. A total of 210 samples were selected using the purposive sampling method. This research utilizes secondary data in the form of the firm’s financial statements and independent auditor’s reports. This research utilized logistic regression analysis to process the data. Results showed that financial distress and previous year’s opinion has significantly affect the firm’s going concern audit opinion while the firm growth has no substantial impact on the firm’s going concern audit opinion. Simultaneously, financial distress, firm growth, and previous year's opinion significantly affected the firm's going concern opinion.

A Study of the Relationship between a Going Concern Opinion and Its Financial Distress Metrics

2017 ◽  
Vol 14 (2) ◽  
pp. 17-28 ◽  
Author(s):  
Vikram Desai ◽  
Joung W. Kim ◽  
Rajendra P. Srivastava ◽  
Renu V. Desai
Keyword(s):  
Search Engine ◽  
Financial Distress ◽  
Primary Objective ◽  
Financial Viability ◽  
Going Concern ◽  
Going Concern Opinion ◽  
One Year ◽  
The Impact ◽  
First Time ◽  
The Relationship

ABSTRACT The primary objective of this paper is to employ search engine technology to investigate the relationship between first-time going concern opinions (GCOs) and the financial viability of the GCO recipients using delisting as a criterion rather than bankruptcy. The paper also investigates the impact of client distress factors on auditors' propensity to issue GCOs. The search engine enables us to examine the entire population of 10-K filings from 1995 to 2015 and also to obtain delisting data, which are not readily available in commercial databases. Contrary to prior research, we find that the survival rate of first-time GCOs is much lower when we use delisting as a measure of financial viability. Around 26 percent of the companies that receive their first GCOs are delisted within a period of one year of the audit opinion date, and 50 percent of the companies that receive their first GCOs are delisted within a period of three years. The bankruptcy rate of first-time GCO companies within one year is around 9 percent. Such evidence may prove useful to the PCAOB's effort to expeditiously assess the intended benefit of GCOs. In addition, we find that the propensity of auditors to issue GCOs varies for each distress factor.

Threats to Auditor Independence: The Impact of Relationship and Economic Bonds

2011 ◽  
Vol 30 (1) ◽  
pp. 121-148 ◽  
Author(s):  
Ping Ye ◽  
Elizabeth Carson ◽  
Roger Simnett
Keyword(s):  
Audit Quality ◽  
Joint Effect ◽  
Auditor Independence ◽  
Audit Firm ◽  
Going Concern ◽  
Long Duration ◽  
Going Concern Opinion ◽  
Negative Effect ◽  
Nonaudit Services ◽  
The Impact

SUMMARY: This study examines the association of a comprehensive set of auditor-client relationship bonds (audit firm tenure, audit engagement partner tenure, long duration director-auditor relationships, and alumni affiliation) with the level of economic bonds provided to an audit client (nonaudit services [NAS]). We further examine the effect of these economic and relationship bonds on auditor independence in the context of nonaudit services fees and the propensity to issue going-concern opinions. It is these economic and relationship bonds that have attracted the interest of regulators in their consideration of audit quality. This study was undertaken in Australia in 2002, which provided a context in which all these relationships could be examined before new regulations were introduced. Results show that audit firm tenure and alumni affiliation are associated with clients purchasing auditor-provided NAS, with stronger associations for clients with low agency costs. We further find that long audit engagement partner tenure and a joint effect of auditor-provided NAS and alumni affiliation have a negative effect on the auditor’s propensity to issue a going-concern opinion.

Information Transfer of Bankruptcy Announcements: Examining the Impact of Auditor Opinions

2019 ◽  
Vol 34 (1) ◽  
pp. 45-66
Author(s):  
Jeffrey R. Casterella ◽  
Rosemond Desir ◽  
Matthew A. Stallings ◽  
James S. Wainberg
Keyword(s):  
Capital Market ◽  
Stock Price ◽  
Information Transfer ◽  
Data Availability ◽  
Going Concern ◽  
Market Participants ◽  
Audit Firms ◽  
Peer Firms ◽  
Going Concern Opinion ◽  
The Impact

SYNOPSIS Auditing standards require auditors to consider whether there is “substantial doubt” that their client will remain a going concern and to, accordingly, modify the audit report (PCAOB AS 2415). Prior research reports larger negative excess returns for bankrupt firms when bankruptcies occur without a prior going concern opinion. We investigate whether such audit opinions can also have an impact on industry peer firms. We find that peer firms experience significantly larger negative stock price drops when rivals' bankruptcies are not preceded by a going concern opinion. In addition, we find evidence of incremental stock price declines for peer firms when Big N audit firms fail to issue a going concern opinion. These findings should be of significant interest to regulators, auditors, and capital market participants as they serve to enhance our current understanding of the importance of going concern opinions for the share pricing of industry peer firms. JEL Classifications: G14; G33; M4; M42. Data Availability: All data are from public sources identified in the manuscript.

Legal Regimes and Investor Response to the Auditor’s Going-Concern Opinion

2016 ◽  
Vol 32 (1) ◽  
pp. 40-72 ◽  
Author(s):  
Asad Kausar ◽  
Richard J. Taffler ◽  
Christine E. L. Tan
Keyword(s):  
United States ◽  
United Kingdom ◽  
The United States ◽  
Specific Situation ◽  
Going Concern ◽  
The United Kingdom ◽  
Increased Risk ◽  
Going Concern Opinion ◽  
The Impact ◽  
First Time

This article examines how legal regime may affect the market’s reaction to the auditor’s going-concern (GC) opinion. We hypothesize that, ceteris paribus, investors in a creditor-friendly bankruptcy regime (the United Kingdom) will react more adversely to a first-time GC opinion indicating increased risk of loss associated with bankruptcy than do investors in a debtor-friendly bankruptcy regime (the United States). Our empirical results are consistent with this expectation. These findings are strengthened by additional analysis of the impact of the recent convergence in bankruptcy regime between the United States and United Kingdom on the market reaction to GC opinions in the United States. Our findings demonstrate a specific situation where the auditing standards and institutional factors interact, with their joint impact affecting the market’s reaction to the GC opinion.

An Analysis of the Usefulness of Debt Defaults and Going Concern Opinions in Bankruptcy Risk Assessment

1998 ◽  
Vol 13 (3) ◽  
pp. 351-371 ◽  
Author(s):  
Benjamin P. Foster ◽  
Terry J. Ward ◽  
Jon Woodroof
Keyword(s):  
Prediction Models ◽  
Bankruptcy Prediction ◽  
Loan Default ◽  
Bankruptcy Risk ◽  
Explanatory Variables ◽  
Going Concern ◽  
Going Concern Opinion ◽  
Loan Defaults ◽  
The Impact ◽  
Covenant Violations

This study extends the research of Hopwood et al. (1994) and Mutchler et al. (1997) by empirically investigating the relationships between loan defaults, violation of loan covenants, going-concern opinions, and bankruptcy in bankruptcy prediction models. One objective of this study is to empirically test the ability of loan defaults/accommodations and loan covenant violations to assess the risk of bankruptcy. Another objective of this study is to investigate the impact of failing to control for these two distress events on results from tests of the usefulness of going-concern opinions in assessing bankruptcy risk. Results suggest that loan default/accommodation and loan covenant violation are both significant explanatory variables of bankruptcy at the time of the last annual report before the event. While a going-concern opinion variable appears to significantly explain bankruptcy, it is not significant when included in a model with loan default/accommodation and covenant violation variables. Consequently, our results suggest that researchers should include both loan default/accommodation and covenant violation as control variables when using bankruptcy to test the usefulness of going-concern opinions.

LEVERAGE DAN OPINI AUDIT GOING CONCERN

2016 ◽  
Vol 12 (2) ◽  
pp. 157
Author(s):  
Kaihatu Bryan Petrus ◽  
Christine Novita Dewi
Keyword(s):  
Positive Impact ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Audit Report ◽  
Audit Opinion ◽  
Going Concern ◽  
Manufacturing Company ◽  
Going Concern Opinion ◽  
The Impact ◽  
Big Four

The purpose of this research is to examine and analyse the impact of leverage towards acceptance ofaudit opinion going concern. Population of this research is manufacturing company listing inIndonesia Stock Exchange (BEI) during 2004-2013. From total 125 manufacturing companies, thereare only 31 companies that fulfill criteria of research sample. This research is using audited financialreport to determine whether company received going concern opinion or not. The result shows thatleverage has significantly positive impact to audit report-going concern. The increase of debt toequity ratio, the more potential company receives audit going concern opinion. This result becomesstronger when the company is audited by bigfour.Keywords: Leverage, Audit Opinion, Going Concern, Big Four

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