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Legal regimes and investor response to the auditor's going-concern opinion
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Kausar, Asad, Taffler, Richard J. and Tan, Christine E. L. (2017) Legal regimes and investor response to the auditor's going-concern opinion. Journal of Accounting, Auditing & Finance, 32 (1). pp. 40-72. doi:10.1177/0148558X15602390 ISSN 0148-558X.
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Official URL: http://dx.doi.org/10.1177/0148558X15602390
Abstract
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.
Item Type: | Journal Article | ||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School > Finance Group Faculty of Social Sciences > Warwick Business School |
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Journal or Publication Title: | Journal of Accounting, Auditing & Finance | ||||||
Publisher: | Sage Publications Ltd. | ||||||
ISSN: | 0148-558X | ||||||
Official Date: | 1 January 2017 | ||||||
Dates: |
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Volume: | 32 | ||||||
Number: | 1 | ||||||
Page Range: | pp. 40-72 | ||||||
DOI: | 10.1177/0148558X15602390 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Restricted or Subscription Access |
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