Title: Going-concern opinions and corporate governance

Authors: Ning Ren; Yun Zhu

Addresses: College of Management, Long Island University Post, 720 Northern Blvd, Greenvale, NY 11548, USA ' The Peter J. Tobin College of Business, St. John's University, 8000 Utopia Parkway, Queens, NY 11439, USA

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 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.

DOI: 10.1504/IJBAAF.2020.106717

International Journal of Banking, Accounting and Finance, 2020 Vol.11 No.2, pp.281 - 302

Received: 31 Jan 2018
Accepted: 28 Aug 2018
Published online: 20 Apr 2020 *

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