Information Content, Audit Reports and Going-Concern: An Australian Study

22 Pages Posted: 15 Dec 2003

See all articles by Max Bessell

Max Bessell

University of South Australia - International Graduate School of Management

Asokan Anandarajan

New Jersey Institute of Technology

Ahson Umar

Yell Group PLC

Abstract

Research conducted on the information content of going concern 'modified' reports in the USA and UK indicates that a modified audit report does not appear to have information content to users if the going concern contingency is disclosed in the notes to the financial statements. In the present study, we provide evidence from Australia. We examine whether modification/qualification by an auditor in Australia (an 'Emphasis of Matter' and an 'Except for' report, respectively) has information content to a user. The results indicate that for a company in a state of financial distress, the modification, in either form, does not appear to significantly enhance either perceptions of risk or decision-making.

JEL Classification: M49, M49, M47, G12G33

Suggested Citation

Bessell, Max and Anandarajan, Asokan and Umar, Ahson, Information Content, Audit Reports and Going-Concern: An Australian Study. Available at SSRN: https://ssrn.com/abstract=479120

Max Bessell (Contact Author)

University of South Australia - International Graduate School of Management ( email )

GPO Box 2471
Adelaide South Australia 5001
Australia

Asokan Anandarajan

New Jersey Institute of Technology ( email )

University Heights
School of Management
Newark, NJ 07102

Ahson Umar

Yell Group PLC

Queen's Walk, Oxford Road
Reading, RG1 7PT
United Kingdom

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