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Title: Going concern opinions are not bad news : evidence from industry rivals
Authors: Coelho, Luís M. S.
Peixinho, Ruben M. T.
Terjensen, Siri
Keywords: Audit reports
Going concern
Competitive effect
Issue Date: 2012
Publisher: Instituto Superior de Economia e Gestão - Departamento de Economia
Citation: Coelho, Luís M. S., Rúben M. T. Peixinho, Siri Terjensen. 2012."Going concern opinions are not bad news : evidence from industry rivals". Instituto Superior de Economia e Gestão - DE working papers nº16-2012
Series/Report no.: DE working papers;nº16/2012
Abstract: This paper examines whether going concern audit opinions (GCO) affect the stock price performance of the announcing firms and their industry rivals. Our original evidence clearly suggests that such accounting event is asymmetrically perceived by the market depending on whether the firm is qualified by the auditor or not. In particular, firms receiving a GCO earn negative abnormal returns at the audit report’s disclosure date and over the following year whereas their industry rivals exhibit positive abnormal returns at the GCO date and in the subsequent one-month period. This is in contrast with the preevent abnormal returns, which, on average, are negative and significant for all firms operating within the industry. Overall, we highlight the relevance of audit opinions and mandatory accounting information for the timing of transactions in financial markets.
ISSN: 0874-4548
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Appears in Collections:DE - Documentos de trabalho / Working Papers

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