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Audit Qualifications and Share Prices: Further Evidence

Author

Listed:
  • Terry Shevlin

    (Doctoral Student, Graduate School of Business, Stanford University.)

  • Greg Whittred

    (School of Accountancy, University of New South Wales.)

Abstract

Employing a portfolio approach which controls directly for the sign (indirectly for the magnitude) of unexpected earnings, this study examines the stock market's reaction to qualified audit reports. There is no substantive evidence that qualifications affect equity prices in the month of their announcement. However, there is evidence that firms that receive certain types of qualification experience negative abnormal returns in the twelve months preceding this event.

Suggested Citation

  • Terry Shevlin & Greg Whittred, 1984. "Audit Qualifications and Share Prices: Further Evidence," Australian Journal of Management, Australian School of Business, vol. 9(1), pages 37-52, June.
    • Handle: RePEc:sae:ausman:v:9:y:1984:i:1:p:37-52
    DOI: 10.1177/031289628400900103
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    References listed on IDEAS

    as
    1. Gonedes, Nj, 1975. "Risk, Information, And Effects Of Special Accounting Items On Capital-Market Equilibrium," Journal of Accounting Research, Wiley Blackwell, vol. 13(2), pages 220-256.
    2. Beaver, Wh & Clarke, R & Wright, Wf, 1979. "Association Between Unsystematic Security Returns And The Magnitude Of Earnings Forecast Errors," Journal of Accounting Research, Wiley Blackwell, vol. 17(2), pages 316-340.
    3. Frank J. Finn & G. P. Whittred, 1982. "On the Use of Naive Expectations of Earnings per Share as Experimental Benchmarks," The Economic Record, The Economic Society of Australia, vol. 58(2), pages 169-173, June.
    4. Finn, Frank J & Whittred, G P, 1982. "On the Use of Naive Expectations of Earnings per Share as Experimental Benchmarks," The Economic Record, The Economic Society of Australia, vol. 58(161), pages 169-173, June.
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    Keywords

    AUDIT QUALIFICATION; ABNORMAL RETURNS;

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