Volume 10, Issue 3, March 2015, Pages 778–790
Accounting, Economics and Financial Management Conference (AEFMC 2014), Iran 26-27 October 2014
Farzin Rezaei1 and Parandis Shahroodi2
1 Assistant Professor in Accounting, Member of Management and Accounting Faculty, Qazvin Branch, Islamic Azad University, Qazvin, Iran
2 M. A. Student, Management and Accounting Faculty, Qazvin Branch, Islamic Azad University, Qazvin, Iran
Original language: English
Copyright © 2015 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Companies have been found to report positive information more quickly than they report negative information (i.e., good news early, bad news late). This research investigates the impact of audit opinion change on the timeliness of financial disclosures; with improvements in audit opinion considered to be good news and deteriorations in audit opinion is considered to be bad news. Both the direction and the magnitude of audit opinion change is considered, with magnitude measuring how far the opinion is from an unqualified opinion (i.e., an unqualified opinion with emphasis of matter paragraph is closer to an unqualified opinion than a qualified opinion is). Data of 103 firms listed in Tehran Stock Exchange from 2003 to 2013 were used. Findings reveal that firms experiencing an improvement in their audit opinions disclose their financial results earlier, while those with audit opinion deteriorations report their financial results later, and it is also found that the magnitude of audit opinion deterioration is related to delay but there is not significant relationship between the magnitude of audit opinion improvement and timeliness of disclosure.
Author Keywords: Audit opinion, change in audit opinion, signaling theory, timeliness, unexpected earnings.
Accounting, Economics and Financial Management Conference (AEFMC 2014), Iran 26-27 October 2014
Farzin Rezaei1 and Parandis Shahroodi2
1 Assistant Professor in Accounting, Member of Management and Accounting Faculty, Qazvin Branch, Islamic Azad University, Qazvin, Iran
2 M. A. Student, Management and Accounting Faculty, Qazvin Branch, Islamic Azad University, Qazvin, Iran
Original language: English
Copyright © 2015 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
Companies have been found to report positive information more quickly than they report negative information (i.e., good news early, bad news late). This research investigates the impact of audit opinion change on the timeliness of financial disclosures; with improvements in audit opinion considered to be good news and deteriorations in audit opinion is considered to be bad news. Both the direction and the magnitude of audit opinion change is considered, with magnitude measuring how far the opinion is from an unqualified opinion (i.e., an unqualified opinion with emphasis of matter paragraph is closer to an unqualified opinion than a qualified opinion is). Data of 103 firms listed in Tehran Stock Exchange from 2003 to 2013 were used. Findings reveal that firms experiencing an improvement in their audit opinions disclose their financial results earlier, while those with audit opinion deteriorations report their financial results later, and it is also found that the magnitude of audit opinion deterioration is related to delay but there is not significant relationship between the magnitude of audit opinion improvement and timeliness of disclosure.
Author Keywords: Audit opinion, change in audit opinion, signaling theory, timeliness, unexpected earnings.
How to Cite this Article
Farzin Rezaei and Parandis Shahroodi, “The relationship between audit opinion change and timing of disclosure,” International Journal of Innovation and Applied Studies, vol. 10, no. 3, pp. 778–790, March 2015.
