Study On The Market Reaction To Going Concern Audit Opinions In Chinese Listed Companies

As is known to all, accounting discipline has "four assumptions"-accounting entity, going concern, accounting period and monetary measurement. The going-concern assumption is the important foundation of other fundamental assumptions. To prepare and audit the financial statements is of great significance. Though the enterprises seem successful now, they can't guarantee success in the future. Uncertainty of going-concern is widespread. Once the going-concern assumption is not reasonable, and even appear bankruptcy, it will bring each stakeholder "dominoes" effect, whether he is the enterprise internal management, governance, or enterprise external layer for investors, creditors, state taxation departments, even auditors will cause a series of massive losses. Whether enterprise can go concern or not has become an extensive and profound economic problem. So it is especially important to study the market reaction to going-concern operating in listed company.On the basis of previous studies, it uses the literature research, standard research, statistical analysis and empirical research. Based on event study in empirical part, combining the actual of the listed companies in China in 2007-2009, it determines the event day and the event window reasonably. And then calculate the average abnormal return and the cumulative average abnormal return. Then using the average abnormal return to judge the market reaction to going-concern opinion and the other. It can judge the market reaction to all kinds of going-concern opinions. And then, we should establish model, and use multivariate linear regression method to inspect each hypothesis. Finally based on empirical analysis, we can get a conclusion that:before or after the audit report within a relatively short period of time window, there are negative market reaction about the going-concern opinion and the other. What's more, there are obvious differences between the two. In addition, there are negative market reactions in all kinds of going-concern opinions. Only with no reserves going-concern opinions and reserves going-concern opinions causing the market reaction is no obvious difference. And the rest have the significant difference.