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Explaining auditors’ propensity to issue going‐concern opinions in Australia after the global financial crisis

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  • Elizabeth Carson
  • Neil Fargher
  • Yuyu Zhang

Abstract

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.

Suggested Citation

  • Elizabeth Carson & Neil Fargher & Yuyu Zhang, 2019. "Explaining auditors’ propensity to issue going‐concern opinions in Australia after the global financial crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2415-2453, December.
    • Handle: RePEc:bla:acctfi:v:59:y:2019:i:4:p:2415-2453
    DOI: 10.1111/acfi.12313
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    Cited by:

    1. Yitang (Jenny) Yang & Roger Simnett & Elizabeth Carson, 2022. "Auditors’ propensity and accuracy in issuing going‐concern modified audit opinions for charities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1273-1306, April.

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