Are Auditors Professionally Skeptical? Evidence from Auditors' Going-Concern Opinions and Management Earnings Forecasts

• 成果类型: Article
• 署名作者: Feng, Mei; Li, Chan
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12064
• 发表日期: 2014
• 页码: 1061-1085
• 关键词: Disclosure policy; association; INDEPENDENCE; INFORMATION; prediction; BIAS

摘要

We examine whether auditors exercise professional skepticism about management earnings forecasts when making going-concern decisions. Using publicly issued management earnings forecasts as a proxy for earnings forecasts provided by managers to auditors, we find that management earnings forecasts are negatively associated with both auditors' going-concern opinions and subsequent bankruptcy. The weight auditors put on management forecasts in the going-concern decision is not significantly different from the weight implied in the bankruptcy prediction model. Moreover, compared with the bankruptcy model, auditors assign a lower weight to management forecasts they perceive as being less credible, including those (1) issued by managers who issued optimistic forecasts in the previous two years, and (2) predicting high earnings increases or high earnings. Taken together, our evidence is consistent with auditors being professionally skeptical about management earnings forecasts when making going-concern decisions.