going-concern opinions in the quot;newquot; legal environment（在u201c持续经营意见;newquot;法律环境）.pdfVIP

© 2002 American Accounting Association Accounting Horizons Vol. 16 No. 1 March 2002 pp. 17–26 Going-Concern Opinions in the “New” Legal Environment Marshall A. Geiger and K. Raghunandan Marshall A. Geiger is an Associate Professor at the University of Rich- mond, and K. Raghunandan is a Professor at Texas AM Interna- tional University. SYNOPSIS: The Securities and Exchange Commission (SEC 2000) recently as- serted that the litigation environment facing auditors has changed significantly since 1994, and that the reduced threat of litigation can influence auditor behavior. This study examines the potential impact of the “new” legal environment described by the SEC by examining the audit reports on 1,871 companies under financial stress during the years 1992–93, 1996–97, and 1999–2000. We find that after controlling for financial stress, company size, and default status, going-concern audit reports were less likely (1) in 1996–97 than in 1992–93, and (2) in 1999–2000 than in 1996– 97. Our results indicate that changes in the litigation environment are associated with the issuance of fewer going-concern-modified opinions to stressed companies in recent years. This finding is consistent with the SEC’s claim that auditors’ behav- ior in recent years has been influenced by reduced litigation pressures. GOING-CONCERN OPINIONS IN THE “NEW” LEGAL ENVIRONMENT The Securities and Exchange Commission asserts that the incentive structure fac- ing auditors changed substantially in recent years (SEC 2000). Specifically, the Com- mission notes that since 1994 there has been a significant decrease in the threat of liability faced by accountants created by four legal developments that reduced the like- lihood of success in private lawsuits against auditors: 1. The Central Bank of Denver case in 1994 eliminated