The impact of qualified audit opinion on stock returns: an empirical study at Amman stock exchange

Purpose This paper aims to investigate the impact of qualified audit opinions on the returns of stocks listed at Amman Stock Exchange (ASE) after the introduction of the recent amendments by the International Auditing and Assurance Standard Board (IAASB) on audits reporting and conclusions. It further investigates if results differ between first time qualified and sequenced qualifications, and between plain qualified opinion and qualifications with going concern. Design/methodology/approach Audit opinions’ announcements and stock returns data are collected from companies’ annual reports for the fiscal years 2016 to 2019 while stock returns are computed from stock closing prices published at ASE website. The authors apply the event study approach and use the market model to calculate normal returns. Cumulative abnormal returns (CARs) and average abnormal returns (AARs) are computed for all qualified audit opinions’ announcements. Findings The empirical evidence suggests that investors at ASE do not react to qualified audit opinions announcements. That is, the authors find an insignificant impact of qualified audit opinion announcements on stock returns using both CAR and AAR estimates. The results are robust to first time and sequenced qualifications, and for qualifications with going concern. Results are also robust to the use of risk adjusted market model. Research limitations/implications The insignificant impact of qualified audit opinions on stock returns have two potential conflicting research implications. First, the new amendments introduced to auditors’ report made them more informative and reduce the negative signals contained in the qualified opinions. That is, investors are now aware of the real causes of qualifications and not overreacting to the qualified opinion. Second, the documented insignificant impact confirms that ASE is not a semi-strong form efficient. Practical implications The apparent excessive use of qualifications should ring the bell on whether auditors misuse their power or companies are really in trouble. Hence, the Jordanian regulatory bodies need to warn auditors against the excessive use of qualifications on the one hand, and to raise the awareness of investors on the implications of auditors’ opinions on the other hand. Originality/value This study is innovative in twofold. First, it explores the impact of qualified audit opinions on stock returns after the introduction of new amendments by IAASB at ASE. In addition, it uses event study approach and distinguishes between first time qualified and sequenced qualifications, and between plain qualified opinion and qualifications with going concern. The results are consistent with efficient market theory and behavioral finance explanations.

Effect of Debt Ratio, Company Size, Reputation of Public Accounting Firms and Company Growth on Going Concern Audit Opinions on Consumer Goods Companies Listed on The Indonesia Stock Exchange For The 2016-2019 Period

Go public companies are required to audit their financial statements by an independent auditor, namely an auditor who works at a public accounting firms. This study aims to examine the effect of debt ratio, company size, reputation of public accounting firms and company growth on going concern audit opinions on Consumer Goods Companies listed on the Indonesia Stock Exchange for the 2016-2019 period. This study uses a quantitative descriptive approach. The population is 51 Consumer Goods Companies listed on the Indonesia Stock Exchange for the 2016-2019 period. The sample is 15 companies. The data analysis method used is logistic regression. The results of the study are the debt ratio, company size, reputation of public accounting firms and company growth simultaneously effect on going concern audit opinions on Consumer Goods Companies listed on the Indonesia Stock Exchange for the 2016-2019 period. Debt ratio, company size, reputation of public accounting firms and company growth partially have no effect on going concern audit opinions on Consumer Goods Companies listed on the Indonesia Stock Exchange for the 2016-2019 period.

Kualitas Audit, Profitabilitas, Leverage Dan Struktur Kepemilikan Terhadap Opini Audit Going Concern

This research is aimed to find empirical evidence of the effect of audit quality, profitability, leverage and ownership structure on going concern audit opinions on manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2017 – 2019. The population of this study is 187 listed manufacturing companies. on the Indonesia Stock Exchange in 2017 – 2019. Using purposive sampling, the sample from this study became 100 manufacturing companies with sample criteria: manufacturing companies listed on the Indonesia Stock Exchange in 2017 – 2019 with complete data and no losses during the period study. This research method uses a quantitative approach with data analyzed using logistic regression. The results obtained are that Audit Quality and Leverage partially have a significant effect on Going Concern Audit Opinions in manufacturing companies listed on the Indonesia Stock Exchange in 2017 - 2019. Profitability and Ownership Structure partially have no effect on Going Concern Audit Opinions in listed manufacturing companies. on the Indonesia Stock Exchange in 2017 – 2019. Audit Quality, Profitability, Leverage, Ownership Structure simultaneously affect the Going Concern Audit Opinion in manufacturing companies listed on the Indonesia Stock Exchange in 2017 – 2019.

Effect of Financial Distress, Debt Default, Audit Delay and Leverage on Going Concern Audit Opinions on Textile and Garment Subsector Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2017-2019 Period

This study examines effect of financial distress, debt default, audit delay and leverage on going concern audit opinions on Textile and Garment Subsector Manufacturing Companies listed on the Indonesia Stock Exchange for the 2017-2019 period. This research uses descriptive quantitative research. The sample of this research is 51 samples. Data processing using logistic regression analysis. The results of the research show that financial distress, debt default, audit delay and leverage have no effect on going concern audit opinions on Textile and Garment Subsector Manufacturing Companies listed on the Indonesia Stock Exchange for the 2017-2019 period. Keywords: Financial Distress, Debt Default, Audit Delay, Leverage, Going Concern Audit Opinions.

The Effect of Company Size, Company Growth, Financial Conditions, Debt Default And Audit Opinion 2016-2019 on Going Concern Audit Opinions (Empire Study of Trading Companies Listed on The Indonesia Stock Exchange)

The purpose of this study is to see the effect of company size, company growth, financial condition and debt default on going concern audit opinions in 2016-2019 on trading companies listed on the Indonesia Stock Exchange, both partially and simultaneously. Every company has financial statements that aim to provide information regarding the financial position of a company that is useful for a large number of users of financial statements in making economic decisions which are prepared periodically for interested parties. The population in this study has all trading companies listed on the IDX for the 2016-2019 period, which are 47 companies and the sample is 100 units of analysis. The research method applies multiple logistic regression analysis techniques. The results of the study show that the company size variable partially influences the going concern audit opinion on trading sector companies listed on the Indonesia Stock Exchange for the 2016-2019 period. Variables of company growth, financial condition and debt default partially do not affect going concern audit opinion on trading sector companies listed on the Indonesia Stock Exchange for the 2016-2019 period. Variables Company Size, Company Growth, Financial Condition and Debt Default together affect the going concern audit opinion on trading sector companies listed on the Indonesia Stock Exchange for the 2016-2019 period.

Effect of Audit Tenure, Financial Condition, Audit Quality, and Leverage on Going Concern Audit Opinions in the Hospitality, Restaurant, and Tourism Sector Listed on the Indonesia Stock Exchange in 2017-2019

The purpose of this study is to determine and examine the effect of audit tenure, financial condition, audit quality, and leverage on going concern audit opinions in the hospitality, restaurant, and tourism sector listed on the Indonesia Stock Exchange in 2017-2019. This research is a quantitative descriptive research. The data used comes from the IDX website www.idx.co.id and meets the requirements. Purposive sampling was used to collect a sample of 11 companies from a population of 35. Data were analyzed using logistic regression analysis. The results show that audit tenure has no significant effect on going concern audit opinions. Financial condition has no significant effect on going concern audit opinions. Audit quality has no significant effect on going concern audit opinions. Leverage has no significant effect on going concern audit opinions. Keywords: Audit Tenure, Financial Condition, Audit Quality, Leverage, Going Concern Audit Opinions.

Assessing records management in municipalities with adverse audit opinions in Limpopo Province, South Africa

This article assesses records management in municipalities with adverse audit opinions in the Limpopo province, South Africa. Audit reports issued by the Auditor-General of South Africa (AGSA) yearly indicate that poor recordkeeping is one of the factors contributing to adverse audit opinions in the public sector. The high level of corruption and maladministration, and lack of accountability and transparency in municipalities have become endemic and are a cause for concern in South Africa. Access to relevant and comprehensive information from records is essential for municipalities to perform their constitutional duties effectively. For this study, a quantitative research approach was employed using the survey design. Six municipalities in Limpopo that had adverse audit outcomes in the auditor-general’s report of 2015/2016 were targeted. A total of 92 questionnaires were distributed to registry staff employed in the municipalities and 86 of these were completed and returned. Findings revealed that the selected municipalities in the province face numerous challenges relating to records management practices, including staff shortages, lack of training and poor storage facilities. The study recommends that municipalities’ management and political office-bearers take all the necessary steps to prioritise records management by employing more people. The study further recommends that more universities in South Africa should provide formal qualifications in records management, and government officials should make funding available for records management practices.

The Effect of Auditor Quality, Liquidity, Profitability, and Solvency on Going Concern Audit Opinions on Property and Real Estate Companies Listed on IDX in 2016-2020

This is document gives formatting instructions for authors preparing papers for publication in the Recent Science Journals. The authors must follow the instructions given in the document for the papers to be published. You can use this document as both an instruction set and as a template into which you can type your own text. In this study, it is about assessing how the influencer or impact of an auditor's quality, liquidity, profitability, and solvency either partially or partially or simultaneously or simultaneously, on the audit opinions of property and real estate companies that are already on the IDX list between 2016 and 2020 Changes in the audit report indicates that the auditor believes there is a possibility that the auditor may be able to leave the company. Various variables, both financial and non-financial, can affect the assessment of a company's capacity to continue its operations. This research involved 65 real estate building companies that can be listed on the IDX from 2016 to 2020, with a total of 195 units of analysis. Multiple linear regression analysis methods are used in the research procedure. Based on the findings, auditor quality, liquidity and profitability have little effect on the audit view of a property and real estate company listed on the IDX between 2016 and 2020. Between 2016 and 2020, the solvency variable has minimal impact. Immobility and a property company have been listed on the IDX. Variables such as the ability to audit, liquidity, profitability, and solvency have an impact on the audit opinion so that property and real estate companies can be listed on the IDX in 2016-2020.

The Effect of Debt Ratio, Profit Ratio, Audit Opinion and Size on Audit Delay of SOE Companies that have go Public in 2016-2020

This study will look at how debt ratio, profit ratio, audit opinion, and size affect audit delay. Since 2016, this study has utilized quantitative methods to identify dependent factors. Sampling with intent. This study use multiple linear regression. The results indicate that size matters in state-owned companies, while debt ratios, profit ratios, and audit opinions have minimal effect.

How does reciprocal rent-seeking between politicians and auditors influence audit quality? - Evidence from China

In this study, we propose a reciprocal rent-seeking game between politicians and individual auditors with political connections, and examine how these auditors' political connections influence their audit quality. Using hand-collected data from the Chinese market from 2008 to 2013, we find that politically connected auditors have a significantly lower tendency to issue modified audit opinions (MAOs). In addition, we also find that politicians' career prospects are significantly adversely influenced by MAOs being issued in their jurisdictions, while auditors' political connections enable them to charge higher audit fees, acquire larger market share, and reduce the likelihood of encountering regulatory sanctions. Further evidence suggests that compared with their non-connected counterparts, the politically connected auditors tend to issue less accurate audit opinions, reduce client firms' earnings response coefficients (ERCs), and increase client firms' capital costs. Collectively, our study results suggest that individual auditors' political connections facilitate the reciprocal rent-seeking activities between these auditors and politicians, which ultimately undermines audit quality.