The Incentives And Decision Usefulness Of Going-Concern Auditing Opinion

This paper firstly reviews the evolution of American going-concern auditing opinion, so we can know the essence of this kind of auditing opinion. Secondly, on the base of analysing the conditions of going-concern of Chinese enterprises and a typical case, we draw our conclusion that chinses capital market urgently demands going-concern auditing opinion.Finally, this paper focuses on financial characteristic of company and the characteristic of going-concern auditing opinion, the market response to going-concern auditing opinion, the value relevance as well as the determinants of auditor reporting going-concern auditing opinion.This dissertation'results present theoretical and empirical guidance for understanding going-concern auditing opinion'usefulness, the information content of going-concern auditing opinion as well as the mechanism of auditor to provide this kind of opinion. These results also provide sustainment for the supervising and managing department to establish related policy.The main findings include: (1) The level of significance toward each financial index chosen by CPA varies by year when deciding whether to drew the conclusion about the uncertainty of going concern of the client company, furthermore, The level of significance varies among different company even in the same year, without taking other factors into account .If the CPA drew the conclusion about the uncertainty of going concern of the client company by using the asset-liability ratio or the retention ratio index as the conference, then they might issue a disclaimer of opinion when the financial situation of the client company went depravation, and the unqualified opinion or the qualified opinion with an explanatory paragraph might come from whether the management disclose the going concern properly ,while have nothing to do with the financial situation.(2)The result of this study indicate that in stock market of China ,GCO given by the auditor has certain information content and decision usefulness.(3) Through considering the cause of giving GCO,the study also discovers that:(I):For the samples of nonST companies,the more important the clients are, the more possibly auditors give GCO; the higher the top shareholders hold stock,the more impossible to be given GCO; and if the auditor belongs to the international big five accounting firms, they are more likely to give GCO.(â…¡)The regression result of non-ST companies imply that, only some variables are significant such as liquidity ratio, asset-liability ratio ,whether that year take place deficiency or not,whether the last year to be given GCO, and the else variables are all not significant. It means that when the company is ST, i.e. in an extreme finance distress, the auditor who makes GCO decision more accords to the financial situation of company, but less being influenced by other factors relatively.