International Differences in Going-Concern Uncertainty Disclosures
Posted: 10 Dec 1997
Date Written: March 1997
This study examines differences in going-concern uncertainty (GCU) information disclosure rates across countries. Based on an analysis of annual reports and publicly available news stories for low stock return companies in each country, firms and auditors in the U.K. and the U.S. are found to explicitly discuss the existence of GCU more often than in France and Germany. Even after controlling for company-specific financial characteristics, size, stock returns and the presence of other factors typically associated with companies in financial distress, U.K. and U.S. firms are shown to have a higher occurrence rate of GCU disclosures. Economic environment characteristics have been used in prior research to explain differences in a variety of disclosure practices across countries, but this study demonstrates their effect even on disclosures related to the fundamental going-concern assumption of historical-cost basis accounting.
JEL Classification: M41, M49
Suggested Citation: Suggested Citation