The Relationship Between External Guarantees And Going-Concern Opinions

Guaranty is a normal economic phenomenon as well as a necessary economic and legal mean to overcome the information asymmetry in the process of economic operation. It is 482 that the number of listed companies with external guarantees in China accounts for 19% of A-shares listed companies of Shanghai and Shenzhen Stock market. The Balance of external guarantees in 2013 is as high as 194.07 billion Yuan and the average reaches up to 403 million Yuan. With the external guarantee behavior of listed companies becoming more and more common, the size of external guarantees is becoming larger and larger, and the risk is higher and higher, which brings the hidden danger, such as bankruptcy or delisting. Therefore, special attention is paid to the external guarantee behavior of listed companies by shareholders, creditors, government departments and other stakeholders who especially hope that relevant regulatory powers can provide enough warnings to the illegal guarantees or malicious guarantees in a timely manner. Auditors, as an important external supervisor, issue reasonable audit opinions on financial reports disclosed by listed companies, which can reduce the information asymmetry of managers and stakeholders and influence shareholders, creditors and other stakeholders to make investment decisions. So potential risks brought by the guarantee behavior of listed companies and its impacts on the sustainable operation ability are worth studying. The impact of guarantee behaviors of going-concern opinions is analyzed from the following four perspectives: the size, the type, the object and the feature of guarantees.This paper selects A-share listed companies of Shanghai and Shenzhen stock market as the research object, using the sample T test, logistic regression analysis and the correlation coefficient F test. The empirical results show that the size of external guarantees was positively related with going-concern opinions issued by auditors. When issuing going-concern opinions for external guarantees, auditors take the size of external guarantees into consideration. After further research, this paper finds that the auditors issue going-concern opinions discriminately in view of various types and objects of external guarantees. Relative to companies with non-bad external guarantees, companies with bad external guarantees are more likely to be issued going-concern opinions. Relative to companies with non-affiliated guarantees, companies with affiliated guarantees are more likely to be issued going-concern opinions. Finally, the counter guarantees cannot reduce the possibility of being issued going-concern opinions. The research conclusions show that the auditor, as an important supervisor, can effectively supervise external guarantee behavior of listed companies by issuing going-concern opinions, achieving the goal of standardizing external guarantee behaviors and providing more information about the sustainable operation ability of the corporations for market participants to make reasonable decisions.The basic structure of this paper is as follows. The first part is introduction. This part mainly introduces the selected research background, research significance, research ideas, research methods and a main framework. The second part is the literature review. This part reviews literature on the related researches of external guarantees and going-concern opinions. The third part talks about the basic theory of external guarantees and going-concern opinions. This part outlines the theoretical framework of external guarantees and going-concern opinions from the following four theories: Information Theory, Accountability Theory, the theory of going-concern opinions and the theory of external guarantees. The fourth part is the mechanism of going-concern opinions issued. This part expounds the basis of going-concern opinions issued and analyzes the mechanism of going-concern opinions issued in view of external guarantees. The fifth part makes hypotheses and designs models. Combining with a large number of literature theories, this part analyzes that the size, type, object and feature of guarantees exert impacts on going-concern opinions. On this basis, this part puts forward four research hypotheses. The sixth part is the empirical analysis. This part makes the empirical test for the impacts of external guarantee behaviors that exerted on going-concern opinions. The empirical analysis includes descriptive statistics, the sample T test, correlation analysis, multiple linear regression analysis and the correlation coefficient F test. What’s more, this part makes a robustness test to the research model. The seventh part is conclusion. On the basis of theoretical and empirical analysis, this paper puts forward some realistic suggestions and points out research limitations and further development directions.