An analysis of determinants of going concern audit opinion: Evidence from Spain stock exchange

Abstract

Purpose: The main objective of this article is to go in-depth into the relationship between going concern audit opinion and certain characteristics of the company and auditor, including financial decline.

Design/methodology/approach: A Logit analysis was carried out in order to enable us to discover the probability of receiving a going concern audit opinion.

Findings: Characteristics of the company and characteristics of the auditor are discussed, and the analysis indicates that it is not financial decline, but rather registering losses and being audited by a small-scale auditor, that increase the likelihood of a company receiving a going concern audit opinion.

Practical implications: The results obtained are interesting for the profession and users because they provide evidence of the reasons that converge in the cases where a going concern audit opinion is included in the auditing reports of companies characterised by being immersed in a financial crisis.

Originality/value: This article considers the circumstances of both the company and the auditing process, which influence the fact that the auditing report includes a going concern audit opinion. In addition, the article includes the financial decline, and let us to analyze if the decline of the company’s financial position between t-1 and t causes the auditor to include a going concern audit opinion.