A Study On Financial Restatements And Audit Opinion

Due to the presence of asymmetric information, Stakeholders attach great importance to financial reporting. Since the mid-1990s, the listed company's financial restatements acts continue to occur. A considerable number of companies publish error correction notice, many companies even occur the phenomenon of repeat restatement. Although the restatement policy is intended to make information more transparent, in fact many of financial restatements' purpose is to manipulate profits. And repeat restatement also reflects the company's internal governance may have significant drawbacks. Meanwhile, the listed company financial restatement passed a bearish signal to the market, affecting the efficiency of the capital market. The CPA is one of the important roles of external oversight mechanisms of the listed companies, for the potential risks of restatements companies, they can play an effective role in corporate governance.This paper selects 2007-2014 listed company in Shanghai and Shenzhen A-share market as research sample. It analyzes the relationship between financial restatements and audit opinion, and studied the nature of the ownership on the basis. Further, the financial restatement of the sample is divided into repeat restatement and single restatement to study whether repeat restatement sample will receive more severe audit opinion. By empirical analysis, this paper draws conclusions as follows:(1) there is a positive correlation between financial restatements and non-standard unqualified audit opinion. (2) financial restatements company are more likely to be issued a going concern opinion. (3) non-state-owned holding listed companies which occurrence financial restatements are more likely to be issued non-standard unqualified audit opinion than the state-owned holding company. (4) compared with single restatements company, repeat restatements company are more likely to be issued non-standard unqualified audit opinion.The innovation of this paper lies in:(1) after exploring potential risks inherent in the financial restatement companies, this paper studies whether restatement company is more likely to be issued non-standard audit opinions and going concern opinion to enrich the research of consequences of financial restatements and external auditors governance. (2) this paper studies the interaction between the nature of ownership and financial restatements impacts on audit opinion. (3) for the first time to study repeat restatements of domestic listed companies, this paper discusses whether occurrence frequency of restatements will influence audit opinion to make more in-depth study of financial restatements.