Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A

M. Enev, Marshall Geiger, A.H. Gold, P. Wallage

Research output: Chapter in Book / Report / Conference proceedingConference contributionAcademicpeer-review

Abstract

In this study we examine the relationship between the auditor’s going concern opinion and management’s forward-looking disclosures in the Management’s Discussion and Analysis (MD&A) section of 10-K filings. The research objective is two-fold and addresses whether the presence of a going concern opinion is associated with (1) the quantity of forward-looking disclosures and (2) the clarity of the forward-looking disclosures. We examine MD&A disclosures from a sample of 2,365 financially distressed companies over the fiscal years 2010-2014 and find that while the absolute number of forward-looking disclosures is lower for companies receiving a going concern opinion, the proportion of forward-looking disclosures in the MD&A is greater in the presence of a going concern opinion. We also find that the forward-looking disclosures are clearer communications, as evidenced by the use of less equivocation, when the company receives a going concern opinion. In addition, we find that forward-looking disclosures are significantly different for first-time versus continuing going concern opinions. In sum, our results suggest generally improved forward-looking disclosures in MD&A when companies receive a going concern opinion from their auditor.
LanguageEnglish
Title of host publicationEuropean Accounting Association 40th Annual Congress
Subtitle of host publicationValencia, Spain
Publication statusPublished - May 2017

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Disclosure
Going concern opinion
Auditors
Proportion
Fiscal
Management Discussion and Analysis
Communication

Keywords

  • MD&A forward-looking disclosures, going concern, audit opinion, equivocation

Cite this

Enev, M., Geiger, M., Gold, A. H., & Wallage, P. (2017). Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A. In European Accounting Association 40th Annual Congress: Valencia, Spain
Enev, M. ; Geiger, Marshall ; Gold, A.H. ; Wallage, P. / Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A. European Accounting Association 40th Annual Congress: Valencia, Spain. 2017.
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Enev, M, Geiger, M, Gold, AH & Wallage, P 2017, Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A. in European Accounting Association 40th Annual Congress: Valencia, Spain.

Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A. / Enev, M.; Geiger, Marshall; Gold, A.H.; Wallage, P.

European Accounting Association 40th Annual Congress: Valencia, Spain. 2017.

Research output: Chapter in Book / Report / Conference proceedingConference contributionAcademicpeer-review

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Enev M, Geiger M, Gold AH, Wallage P. Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A. In European Accounting Association 40th Annual Congress: Valencia, Spain. 2017