Going-Concern Opinions and Corporate Governance
29 Pages Posted: 25 Feb 2018
Date Written: January 25, 2018
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: Suggested Citation