Public Re-Release of Going-Concern Opinions and Market Reaction

Accounting and Business Research, Vol. 47, No. 3, 2017

56 Pages Posted: 1 Nov 2016 Last revised: 1 Aug 2017

See all articles by Sarfraz Khan

Sarfraz Khan

University of Louisiana at Lafayette

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Emeka T. Nwaeze

University of Texas - San Antonio; Rutgers Business School - Camden

Date Written: October 19, 2016

Abstract

This paper examines the market reaction to the public announcement of going-concern (GC) opinions through the news media. In the early 2000s, NASDAQ and AMEX required firms listed on their exchanges to announce publicly previously disclosed information, such as the issuance of a GC opinion, through a press release or the news media. We examine the stock market reaction to the re-release of GC opinions. We find significant abnormal stock return volatility and trading volume at the re-release of this information. Further, based on an analysis of intraday transactions, we find higher abnormal trading activity in small trades around the re-release of the GC opinion, but largely no changes in large trades during the same period. In this respect, the investors that initiate the small trades act as if they are surprised by the information contained in the press release of GC opinions. Such an action, in turn, can be viewed as evidence of a delayed response to the information in GC opinions by a section of investors.

Keywords: Going-Concern Opinion, News-Media, Press-Release, Trade Sizes, Market-Reaction

JEL Classification: M41, M42, M48

Suggested Citation

Khan, Sarfraz and Lobo, Gerald J. and Nwaeze, Emeka T., Public Re-Release of Going-Concern Opinions and Market Reaction (October 19, 2016). Accounting and Business Research, Vol. 47, No. 3, 2017, Available at SSRN: https://ssrn.com/abstract=2861471

Sarfraz Khan

University of Louisiana at Lafayette ( email )

Department of Accounting
214 Hebrard Blvd.
Lafayette, LA 70508
United States

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Emeka T. Nwaeze (Contact Author)

University of Texas - San Antonio ( email )

Department of Accounting,
One UTSA Circle,
San Antonio, TX 78249-0632
United States
(210) 458-7462 (Phone)
(210) 458-4322 (Fax)

Rutgers Business School - Camden

227 Penn Street
Camden, NJ 08102
United States
609-225-6651 (Phone)
609-225-6231 (Fax)

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