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Changes in the audit environment and auditors' propensity to issue going-concern opinions

Fargher, Neil; Jiang, Alicia Liwei

Description

The high-profile collapses during the period 2000 to 2002 resulted in increased litigation against auditors, higher insurance costs, increased media scrutiny, and increased regulatory review of the auditing profession. Prior research suggests that auditors' decisions were more conservative after this period. We compare auditors' propensity to issue going-concern opinions before and after 2000-2002. Consistent with increased auditor conservatism, we find that auditors were more likely to issue...[Show more]

dc.contributor.authorFargher, Neil
dc.contributor.authorJiang, Alicia Liwei
dc.date.accessioned2015-12-07T22:31:39Z
dc.identifier.issn0278-0380
dc.identifier.urihttp://hdl.handle.net/1885/22852
dc.description.abstractThe high-profile collapses during the period 2000 to 2002 resulted in increased litigation against auditors, higher insurance costs, increased media scrutiny, and increased regulatory review of the auditing profession. Prior research suggests that auditors' decisions were more conservative after this period. We compare auditors' propensity to issue going-concern opinions before and after 2000-2002. Consistent with increased auditor conservatism, we find that auditors were more likely to issue going-concern opinions to financially stressed companies immediately after the crisis period. The increase in going-concern modifications issued resulted in a few less companies observed to fail without a going-concern modification, but only at the cost of more modifications issued to companies that did not fail. The results do not, however, support continued auditor conservatism beyond 2003.
dc.publisherAmerican Accounting Association
dc.sourceAuditing: A Journal of Practice and Theory
dc.subjectKeywords: Audit environment; Audit quality; Going-concern modifications
dc.titleChanges in the audit environment and auditors' propensity to issue going-concern opinions
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume27
dc.date.issued2009
local.identifier.absfor150102 - Auditing and Accountability
local.identifier.ariespublicationu9900263xPUB23
local.type.statusPublished Version
local.contributor.affiliationFargher, Neil, College of Business and Economics, ANU
local.contributor.affiliationJiang, Alicia Liwei, Macquarie University
local.bibliographicCitation.issue2
local.bibliographicCitation.startpage55
local.bibliographicCitation.lastpage77
local.identifier.doi10.2308/aud.2008.27.2.55
dc.date.updated2016-02-24T12:13:35Z
local.identifier.scopusID2-s2.0-77249087618
local.identifier.thomsonID000265151200003
CollectionsANU Research Publications

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