Auditor’s going-concern opinion: omission or precaution?
DOI:
https://doi.org/10.11606/issn.1982-6486.rco.2025.226853Keywords:
Audit’ opinion, Going-concern opinion, Bankruptcy, Judicial reorganization, InsolvencyAbstract
This study examines the auditor’s going-concern opinion and its impact on the propensity for bankruptcy and judicial reorganization among companies listed on the Brazilian stock exchange (B3). The analysis is based on a sample of 256 companies (1,364 firm-year observations) from 2010 to 2020, using logistic and negative binomial regression models. The results indicate that, although auditors do not formally modify the audit opinion, the mere disclosure of significant going concern uncertainties in the independent auditor’s report is associated with an increased probability of insolvency. The evidence suggests that this signaling acts as a market trigger, contributing to the debate on the “self-fulfilling prophecy” and the auditor’s dilemma between regulatory compliance and caution. This study has implications for regulators, auditors, and users of accounting information, reinforcing the importance of goin-concern reporting as a signaling mechanism.
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