How do analysts deal with bad news? Going-concern opinions and analyst behaviour

Tese dout., University of Edinburg, 2008

The intra-industry effects of going concern withdrawn audit reports

Dissertação de mestrado, Finanças Empresariais, Faculdade de Economia, Universidade do Algarve, 2014

Audit fees, non-audit fees and auditor going-concern reporting decisions in the United Kingdom

The accounting profession has come under increased scrutiny over recent years about the growing number of non-audit fees received from audit clients and the possible negative impact of such fees on auditor independence. The argument advanced is that providing substantial amounts of non-audit services to clients may make it more likely that auditors concede to the wishes of the client management when difficult judgments are made. Such concerns are particularly salient in the case of reporting decisions related to going-concern uncertainties for financially stressed clients. This study empirically examines audit reports provided to financially stressed companies in the United Kingdom and the magnitude of audit and non-audit service fees paid to the company’s auditors. We find that the magnitude of both audit fees and non-audit fees are significantly associated with the issuance of a going-concern modified audit opinion. In particular, financially stressed companies with high audit fees are more likely to receive a going-concern modified audit opinion, whereas companies with high non-audit fees are less likely to receive a goingconcern modified audit opinion. Additional analyses indicate that the results are generally robust across alternative model and variable specifications. Overall, evidence supports the contention that high non-audit fees have a detrimental effect on going-concern reporting judgments for financially stressed U.K. companies.

Executive characteristics and going concern opinions

Auditors have come under increased scrutiny over the past several years about the growing number of client failures without a warning in the form of a going-concern modified (GCM) audit opinion. Statement on Auditing Standards No. 59 requires auditors to evaluate whether substantial doubt exists on an audit client’s ability to continue as a going concern (AICPA 1988). My dissertation consists of three essays. ^ For the three essays, I empirically investigate issues related to GCM audit opinions and executive characteristics. Specifically, I examine the impact of executive tenure and gender on the issuance of GCM audit opinions. In addition, my dissertation addresses two other unique issues. Given that the Sarbanes-Oxley Act represents an important watershed event in the history and regulation of the accounting profession, I provide evidence about auditors’ propensities to issue GCM audit opinions in the post-SOX period. Further, I also expand extant research in this area by using multiple outcomes and thus go beyond the traditional use of bankruptcy alone as a tool to evaluate auditors’ GCM opinion. ^ The results indicate that, after controlling for other financial characteristics, GCM audit opinions are significantly more likely for firms that have CFOs with short tenure and/or for firms with a female CFO or CEO. However, when examining the association between executive characteristics and two types of reporting errors, the results vary with the type of reporting error. Overall, the results provide evidence that executive characteristics are associated with auditors' reporting decisions. ^

Executive Characteristics and Going Concern Opinions

Auditors have come under increased scrutiny over the past several years about the growing number of client failures without a warning in the form of a going-concern modified (GCM) audit opinion. Statement on Auditing Standards No. 59 requires auditors to evaluate whether substantial doubt exists on an audit client’s ability to continue as a going concern (AICPA 1988). My dissertation consists of three essays. For the three essays, I empirically investigate issues related to GCM audit opinions and executive characteristics. Specifically, I examine the impact of executive tenure and gender on the issuance of GCM audit opinions. In addition, my dissertation addresses two other unique issues. Given that the Sarbanes-Oxley Act represents an important watershed event in the history and regulation of the accounting profession, I provide evidence about auditors’ propensities to issue GCM audit opinions in the post-SOX period. Further, I also expand extant research in this area by using multiple outcomes and thus go beyond the traditional use of bankruptcy alone as a tool to evaluate auditors’ GCM opinion. The results indicate that, after controlling for other financial characteristics, GCM audit opinions are significantly more likely for firms that have CFOs with short tenure and/or for firms with a female CFO or CEO. However, when examining the association between executive characteristics and two types of reporting errors, the results vary with the type of reporting error. Overall, the results provide evidence that executive characteristics are associated with auditors' reporting decisions.

Audit reports in Australia : 2005-2013: Preliminary Findings

This paper provides a preliminary summary of audit reports for Australian listed public companies for the period 2005 to 2013, focusing on auditor reporting in the most recent period 2011 to 2013. Prior research has shown that audit reports modified for uncertainty relating to the going concern assumption increased following the shock of the Global Financial Crisis (GFC) in late 2007. This occurred in Australia from 2008 where Xu et al. (2011) find that reports modified for going concern uncertainty increase from 12% in 2005 to 2007 to 18% in 2008 and 22% in 2009. Similar trends are observable for the United States as shown by an increase from 14% in 2003 to 21% in 2008 (Cheffers et al. 2010, Geiger et al. 2014). The aim of this report is to examine the frequency of the various types of audit reports issued in Australia during the period 2011 to 2013, with a focus on reports emphasizing significant uncertainty in regard to the going concern assumption.

Riscos de quebra de continuidade e o papel do auditor

Mestrado em Auditoria

Venda de ativos operacionais e assimetria de informação: estudo comparativo entre o regime jurídico do contrato de trespasse e da recuperação judicial

Primeiramente, o presente trabalho se presta a demonstrar a relevância da recuperação judicial de empresas no que diz respeito à maximização de valor dos bens, considerados em conjunto (valor de going concern), quando mantidos operacionais, conforme teoria do common pool assets. Posteriormente, será verificado como deve ser a estruturação do regime legal da venda de ativos de forma a maximizar valor dos bens alienados, juntamente com uma comparação entre os regimes jurídicos do contrato de trespasse, regulado pelo Código Civil de 2002, e da recuperação judicial, estabelecido na Lei 11.101/05, especificamente no que diz respeito à venda de unidades produtivas isoladas. A diferenciação dos institutos do trespasse e da recuperação judicial será feita principalmente com base em características relacionadas à sucessão do passivo do estabelecimento comercial (ou unidade produtiva) no momento de sua alienação a terceiros, e como a assimetria de informação pode influenciar na maximização do valor, no momento da venda dos bens, em cada um dos regimes.

A trava bancária na recuperação judicial e o seu impacto nas formas de financiamento da empresa: uma análise através da teoria do “common pool assets” de Thomas H. Jackson

O objeto de estudo do presente trabalho é a Trava Bancária, mecanismo jurídico previsto no art. 49, § 3º da Lei de Falências e Recuperação Judicial de Empresas - LRF, por meio do qual dívidas contraídas pelas empresas junto às instituições financeiras são garantidas pela alienação fiduciária dos seus recebíveis. Serão analisadas as peculiaridades desse tipo de garantia fiduciária e, em especial, a prerrogativa que os credores detentores desse tipo de garantia possuem dentro dos procedimento de recuperação judicial de empresas, de não precisarem submeter seus créditos aos procedimentos concursais. Será feita uma análise para demonstrar que a manutenção da trava bancária diminui o valor de going concern da empresa em recuperação, pois a criação de um tipo de credor que é blindado quanto aos efeitos da recuperação judicial impede que essa mantenha-se como um procedimento concursal coletivo e compulsório, requisitos que são essenciais para incentivar os credores da empresa a trabalharem de forma conjunta, mantendo o valor de going concern da empresa recuperanda, com o objetivo de recuperar a empresa e saldarem seus créditos. Tem-se como objetivo demonstrar que, a existência da trava bancária na recuperação judicial, pode afetar negativamente o acesso das empresas ao financiamento por equity. Isto porque, os acionistas das empresas são os últimos da fila de credores a receberem caso a empresa entre em recuperação judicial, e, portanto, acredita-se que, ao saberem que existe um mecanismo que poderá inviabilizar a recuperação judicial das empresas em crise, atrapalhando sua geração de valor de going concern, é possível que investidores desistam de investir em empresas financiadas por dívidas garantidas pela alienação fiduciária de seus recebíveis, passando a ser essa uma variável levada em consideração quando da realização dos procedimentos de valuation para compra de participação acionária em empresas. Os pressupostos teóricos que serão utilizados para embasar a premissa de que a trava bancária gera impacto negativo no valor de going concern das empreas em crise, dificultando seu processo de recuperação, serão extraídos e elaborados a partir da Teoria da Common Pool Assets do autor norte-americano, Thomas H. Jackson. A relevância deste trabalho decorre da importância que o procedimento de recuperação judicial apresenta para as empresas em crise e para os seus credores, bem como a importância que esse tipo de procedimento adquiriu no País. Com efeito, desde a entrada em vigor da LRF no ordenamento jurídico brasileiro em 2005, cerca de 4 mil companhias já pediram recuperação judicial. Além disso, o trabalho mostra-se relevante por abordar questão relativa às formas de financiamento das empresas, assunto que tem reflexo no Custo Brasil e impacto direto no desenvolvimento da economia brasileiro.

A qualidade da informação financeira previsional como instrumento de avaliação do pressuposto da continuidade: o caso das empresas municipais

Mestrado em Auditoria

A auto-eficácia e as expetativas de resultado na procura de emprego: o papel das atividades de formação no adulto

Dissertação de Mestrado, Psicologia Social e das Organizações, Faculdade de Ciências Humanas e Sociais, Universidade do Algarve, 2016

Longitudinal study of changes in body mass index, anthropometric measures, dietary intake and physical activity in cohorts of school-going Irish adolescents

The prevalence of obesity worldwide has increased dramatically over the last few decades. Poor dietary habits and low levels of exercise in adolescence are often maintained into adulthood where they can impact on the incidence of obesity and chronic diseases. A 3-year longitudinal study of anthropometric, dietary and exercise parameters was carried out annually (2005 - 2007) in 3 Irish secondary schools. Anthropometric measurements were taken in each year and analysed longitudinally. Overweight and obesity were at relatively low levels in these adolescents. Height, weight, BMI, waist and hip circumferences and TST increased significantly over the 3 years. Waist-to-hip ratio (WHR) decreased significantly over time. Boys were significantly taller than girls across the 3 years. A 3-day weighed food diary was used to assess food intake by the adolescents. Analysis of dietary intake data was determined using WISP©. Mean daily energy and nutrient intakes were reported. Mean daily energy and macronutrient intakes were analysed longitudinally. The adolescents’ diet was characterised by relatively high saturated fat intakes and insufficient fruit and vegetable consumption. The dietary pattern did not change significantly over the 3 years. Boys consumed more energy than girls over the study period. A validated questionnaire was used to assess physical activity and sedentary activity levels. Boys were substantially more active and had higher energy expenditure estimates than girls throughout the study. A significant longitudinal decrease in physical activity levels among the adolescents was observed. Both genders spent more than the recommended amount of time (hrs/day) pursing sedentary activities. The dietary pattern in these Irish adolescents is relatively poor. Of additional concern is the overall longitudinal decrease in physical activity levels. Promoting consumption of a balanced diet and increased exercise levels among adolescents will help to reduce future public health care costs due to weight-related diseases.

Time use, daily activities, and health-related quality of life of school-going late adolescents in Cork city and county: A cross-sectional study

Aim: This thesis examines a question posed by founding occupational scientist Dr. Elizabeth Yerxa (1993) – “what is the relationship between human engagement in a daily round of activity (such as work, play, rest and sleep) and the quality of life people experience including their healthfulness” (p. 3). Specifically, I consider Yerxa’s question in relation to the quotidian activities and health-related quality of life (HRQoL) of late adolescents (aged 15 - 19 years) in Ireland. This research enquiry was informed by an occupational perspective of health and by population health, ecological, and positive youth development perspectives. Methods: This thesis is comprised of five studies. Two scoping literature reviews informed the direction of three empirical studies. In the latter, cross-sectional time use and HRQoL data were collected from a representative sample of 731 school-going late adolescents (response rate 52%) across 28 schools across Cork city and county (response rate 76%). In addition to socio-demographic data, time use data were collected using a standard time diary instrument while a nationally and internationally validated instrument, the KIDSCREEN-52, was used to measure HRQoL. Variable-centred and person-centred analyses were used. Results: The scoping reviews identified the lack of research on well populations or an adolescent age range within occupational therapy and occupational science; limited research testing the popular assumption that time use is related to overall well-being and quality of life; and the absence of studies that examined adolescent 24-hour time use and quality of life. Established international trends were mirrored in the findings of the examination of weekday and weekend time use. Aggregate-level, variable-centred analyses yielded some significant associations between HRQoL and individual activities, independent of school year, school location, family context, social class, nationality or diary day. The person-centred analysis of overall time use identified three male profiles (productive, high leisure and all-rounder) and two female profiles (higher study/lower leisure and moderate study/higher leisure). There was tentative support for the association between higher HRQoL and more balanced time use profiles. Conclusion: The findings of this thesis highlight the gendered nature of adolescent time use and HRQoL. Participation in daily activities, singly and in combination, appears to be associated with HRQoL. However, the nature of this relationship is complex. Individually and collectively, adolescents need to be educated and supported to create health through their everyday patterns of doing.