계속기업특기사항과 보수주의 = Unqualified Opinion with Going Concern and Conservatism

다국어 초록 (Multilingual Abstract)

We investigate the relationship between the unqualified opinion with going-concern uncertainty in explanatory paragraph(GC) and accounting conservatism for the audit reports from 2000 to 2010. We also analyze whether the Big 4 audit firms have a higher propensity of GC opinion or not. Two explanations can be provided on why the GC firms have incentives for conservative accounting. First, as GC firms generally suffer from serious financial distresses, as well as face going concern uncertainty, their managers readily try to dispose of the assets by underestimation of valuation to reduce the liabilities as one of method of reconstruction. Second, as the auditors associating with the firms of going concern uncertainty which may lead to high business failure risks, they have a high potential risk of litigations through clients` financial distress. Accordingly, the auditors would request their clients to do the conservative accounting to reduce their litigation risks. These two aspects leads the firms a conservative accounting. Our findings are as follows. First, there exists significantly positive relationship between the GC firms and the conservative accounting. This result reflects the auditor`s conservatism to the GC firms and the managers` efforts to get out of the GC opinion for the subsequent year. Second, we find no consistent results in proving differences in GC opinion propensity between Big4 firms and others. The results in this study provide the accounting information users and investors with practical implications and understandings for auditor`s roles for GC firms. The auditors who issued GC opinion give their clients pressures for a conservative accounting to reduce their litigation risks. Also the managers who receive GC opinions from auditors accept conservative accounting to avoid the same GC opinion in subsequent years. This study contributes the generalization of results by using the eleven years period of stable samples for evaluation of GC firms` conservative accounting in Korea.

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