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Long‐term effects of the going concern opinion

George E. Nogler (University of Massachusetts, Lowell, Massachusetts, USA)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 1 June 2004



Studies have suggested that the auditor's fear of self‐fulfilling prophecy may alter an auditor's behavior concerning the issuance of a going concern opinion. This study investigates a sample of firms that received auditor going concern opinions and ultimately resolved these opinions successfully, as evidenced by subsequent unqualified opinions. The study finds that over 70 percent of these firms provide value to shareholders when monitored over a 12 to 18 year time period. Additionally, the study finds that this result is consistent with a matching sample of firms that had not received going concern opinions. The study further suggests that shareholders do best when the firm is acquired rather than when it continues in business. Larger firms are more likely subjects of acquisition while the smallest firms simply go out of existence over time. Considering the similarity in outcomes between the resolved going concern sample and the matching sample, it appears that there is no long‐term stigma attached to having received a going concern opinion.



Nogler, G.E. (2004), "Long‐term effects of the going concern opinion", Managerial Auditing Journal, Vol. 19 No. 5, pp. 681-688.



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Copyright © 2004, Emerald Group Publishing Limited

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