The Research On Going Concern Of Enterprises And Its Disclosure

With the outbreak of the world financial crisis, many well-known enterprise gobankrupt, which brings the world economy with great shock. Thus there arises arethink of the enterprises· going concern problem from all walks of life. First of all, asone of the basic accounting assumptions the going-concern assumption is impacted bythe new economic environment. While in traditional accounting theory thegoing-concern assumption was defined by the way of falsification, which is nowunsuitable for the tough economic environment. Therefore, it requires a newinterpretation of the connotation of continuing operations. Secondly, in terms ofinvestors, in the face of rapidly changing market conditions, the enterprises· goingconcern ability becomes the focus of attention. Whether investors accurately grasp theenterprises· going concern status or not will affect the success of investors·investment decisions. Therefore, the importance of the going concern informationdisclosure will highlight out. The going concern problem has received attention inmany ways, so there are many research literatures in accounting and economics on theissue. However, previous studies mostly focus on the rethink of the going-concernassumption and the forecasting of going-concern crisis. Based on previous studies wemake a study that systematacially covers the issues of the essence of going-concern,the theory basis of going-concern disclosure, the status quo of information disclosureof continuous operations, assessment system of going-concern ability and theinformation disclosure framework of company·s going concern. In brief, this paperfocuses on disclosure of going-concern information.Enterprises going-concern is neither a innate characteristic nor a permanentproperty. Instead going concern of enterprises in essence is a kind of enterprise·sability, the degree of which depends on the compound mode of the two main factorsof enterprise--financial capital and human capital. To analyse the going-concernability detailedly, we deconstruct it into three main elements which are quality of finance, performance of operation and efficiency of corporate governance. Whilethe three-factor model of going-concern ability is the core problem of going-concerndisclosure, this study creates an evaluation index system to evaluate thegoing-concern ability based on the three-factor model. Furthermore, the index systemsupports for the going-concern information disclosure of evidence. Also on this basis,this article constructs the framework of going-concern information disclosure. Firstlythe going-concern information should possess two main qualitative characteristics--sufficient relevance and relative reliability so as to meet the requirements of thediversification of investors’ decision usefulness. Based on this goal and the evaluationindex system of going-concern ability, the going-concern report emerges sixcharacteristics that are different from traditional report. The characteristics areincomplete accounting information, incomplete historical information, incompletemonetary information, incomplete data information, incomplete periodicalinformation and incomplete formative information. In the end of the paper,suggestions are given for improving the going-concern information disclosure.