Managerial Overconfidence And Going-Concern Modified Audit Opinion Decisions

The Auditor’s Going-Concern Opinion Decision

In this study, we expand on several previous studies related to the materiality judgments and the auditor’s propensity to issue a going-concern opinion to financially troubled but non-bankrupt companies. We test the auditor’s materiality thresholds by investigating whether there is any significant difference in accuracy among audit firms, especially between Big Six (Five) and non-Big Six (Five)...

Predicting going concern opinion with data mining

The auditor is required to evaluate whether substantial doubt exists about the client entity's ability to continue as a going concern. Accounting debacles in recent years have shown the importance of proper and thorough audit analysis. Since the 80s, many studies have applied statistical techniques, mainly logistic regression, as an automated tool to guide the going concern opinion formulation....

Managerial Overconfidence , Agency Problems , Financing Decisions and Firm Performance

Counterparty Responses to Managerial Overconfidence

Existing research links CEO personality traits to a number of corporate decisions including overinvestment, external acquisitions, and earnings management. These findings raise the question of whether counterparties distinguish between differences in individual CEO behavior, and how they respond to it. We focus on two key counterparties – auditors and credit rating agencies – and examine whethe...

Agent-based Simulation and the Auditor Going Concern Opinion – a Case Study of Frontier Airlines

The complex and interconnected world in which organizations operate presents many challenges to organizational sustainability and the traditional approaches audit firms use to assess the ongoing viability of their clients. We propose agent-based modeling (ABM) as a viable tool for auditors to account for the interaction of local and environmental factors to determine organizational success. To ...