Going-Concern Opinions and Corporate Governance
Ren,N., Zhu, Y. Going-Concern Opinions and Corporate Governance.International Journal of Banking, Accounting and Finance. Forthcoming
35 Pages Posted: 29 Nov 2018
Date Written: October 29, 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 with 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, indicating strong monitoring function of the auditors.
Keywords: going-concern opinion, corporate governance, blockholder ownership, institutional ownership, CEO compensation, CEO turnover
JEL Classification: M41, M12
Suggested Citation: Suggested Citation