Abstract
| Original language | English |
|---|---|
| Title of host publication | AAA Auditing Section Midyear Meeting (Orlando, Florida) |
| Publication status | Published - Jan 2017 |
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Keywords
- MD&A forward-looking disclosures, going concern, audit opinion, equivocation
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Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A. / Enev, M.; Geiger, Marshall; Gold, A.H.; Wallage, P.
AAA Auditing Section Midyear Meeting (Orlando, Florida). 2017.Research output: Chapter in Book / Report / Conference proceeding › Conference contribution › Academic › peer-review
TY - GEN
T1 - Going Concern Opinions and Management's Forward Looking Disclosures: Evidence from the MD&A
AU - Enev, M.
AU - Geiger, Marshall
AU - Gold, A.H.
AU - Wallage, P.
PY - 2017/1
Y1 - 2017/1
N2 - 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.
AB - 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.
KW - MD&A forward-looking disclosures, going concern, audit opinion, equivocation
UR - https://ssrn.com/abstract=2938703
M3 - Conference contribution
BT - AAA Auditing Section Midyear Meeting (Orlando, Florida)
ER -