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Explaining auditors’ propensity to issue going‐concern opinions in Australia after the global financial crisis
Author(s) -
Carson Elizabeth,
Fargher Neil,
Zhang Yuyu
Publication year - 2019
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.12313
Subject(s) - scrutiny , audit , accounting , commission , financial crisis , business , going concern , finance , auditor's report , economics , political science , law , macroeconomics
We document an increase in auditors issuing going‐concern opinions in Australia over a prolonged period since the Global Financial Crisis that is not fully explained by changes in client risk. Overall, our evidence is consistent with auditors reporting more conservatively with the increased level of scrutiny from Australian Securities and Investments Commission inspections and other increased regulation, and in particular, the negative attention following the 2011–2012 inspections. As a result, auditor reports with reference to going‐concern issues have become less informative regarding future corporate failure.