Premium
Audit opinions and information asymmetry in the stock market
Author(s) -
Abad David,
SánchezBallesta Juan P.,
Yagüe José
Publication year - 2017
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12175
Subject(s) - information asymmetry , audit , accounting , adverse selection , business , stock (firearms) , sample (material) , auditor's report , asymmetry , actuarial science , finance , physics , quantum mechanics , mechanical engineering , chemistry , chromatography , engineering
This study analyses the relationship between the content of the audit reports and information asymmetry levels in the stock market for a sample of S panish firms. By implementing an association study, we document (1) that firms with audit qualifications show higher information asymmetry levels than those with unqualified opinions; (2) firms with non‐quantified qualifications show higher informational asymmetry than firms with quantified qualifications; and (3) we find a stronger effect on the level of informational asymmetry in the case of going concern qualifications. Our findings suggest that audit qualifications reporting more uncertainty on firm accounting statements result in higher adverse selection risk.