Going-Concern Opinions and Corporate Governance

29 Pages Posted: 25 Feb 2018

See all articles by Ning Ren

Ning Ren

Long Island University Post; Rensselaer Polytechnic Institute

Yun Zhu

St. John's University - Department of Economics and Finance

Date Written: January 25, 2018

Abstract

This paper looks into the issuance of auditor's going-concern opinions and investigates how it triggers subsequent changes in corporate governance, specifically, the corporate control, executive compensation and management turnover. Using a difference-in-difference approach adopting the exogenous shock of Auditing Standard No. 5 (AS5) in 2007, we find that going-concern opinion leads to the decrease in blockholder ownership and institutional ownership, the reduction in CEO's cash compensation and total compensation, and the increase in the turnovers of top executives and auditors.

Keywords: going-concern opinion, corporate governance, blockholder ownership, institutional ownership, CEO compensation, CEO turnover

Suggested Citation

Ren, Ning and Zhu, Yun, Going-Concern Opinions and Corporate Governance (January 25, 2018). Available at SSRN: https://ssrn.com/abstract=3115624 or http://dx.doi.org/10.2139/ssrn.3115624

Ning Ren (Contact Author)

Long Island University Post ( email )

720 Northern Boulevard
Brookville, 11548-1327
United States
5162992095 (Phone)

Rensselaer Polytechnic Institute ( email )

United States
5852819777 (Phone)

Yun Zhu

St. John's University - Department of Economics and Finance ( email )

Jamaica, NY 11439
United States

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