Director Going Concern Note Disclosure and Distress Resolution
33 Pages Posted: 30 Mar 2021
Date Written: April 1, 2021
This study considers the informativeness of directors’ disclosure of going concern uncertainty in the financial statement notes that are regulated by AASB 101. It examines whether first-time disclosures and the linguistic tone of their content are related to distress resolution for companies that enter Voluntary Administration (VA), which is the insolvency rescue scheme in Australia. The results show that disclosures with a negative tone and those with a preponderant negative tone are related to VA outcomes. Overall, the findings show directors use AASB 101 note disclosures to provide useful information about going concern uncertainty.
Keywords: Going concern, note disclosure, AASB101, tone, distress resolution
JEL Classification: M41, G33
Suggested Citation: Suggested Citation