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Are auditor’s going concern opinions affected by debt-related events?
This paper examines the issue of audit failure and attempts to answer the question why some bankrupt firms receive unmodified opinions while others do not. Specifically, we examine the impact of debt-related events on auditors’ decisions to issue going-concern opinions. We find that, in general, the occurrence of debt-related events does not prompt the issuance of going-concern opinions. The results suggest that audit failures may be attributed to the auditors’ downplay or negligence of the importance of debt-related events. The findings also suggest that managers who try to bring the company out of financial distress should avoid taking debt financing activities that prompt auditors to make going-concern qualifications.
History
Editor
Lee CFParent Title
Advances in quantitative analysis of finance and accountingStart Page
101End Page
143Number of Pages
43ISBN-13
9789812386694Publisher
World ScientificPlace of Publication
SingaporeOpen Access
- No
External Author Affiliations
Faculty of Arts, Business, Informatics and Education; Not affiliated to a Research Institute;Era Eligible
- Yes