Strategic auditor behavior and going-concern decision

Article Abstract:

A game-theoretic model presents how a client can potentially avoid a going-concern opinion and its self-fulfilling prophecy by switching auditors. The model shows that an incumbent auditor who faces the threat of dismissal is less willing to express a going-concern opinion and the probability of auditor switching vary the auditors' reporting judgments. The client's viability also affects the tendency of the auditor to express going-concern opinion.

Accounting Methods, Going concern (Accounting), Going concern

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Why managers voluntarily make income increasing accounting change

Article Abstract:

The decision by a manager to effect an accounting change that results in an increase in income is motivated by several factors such as externality costs and current salary structure of the manager. The reaction of investors or the stock market to such a change would rely on the amount of information that they possess concerning the cause of the manager's decision and the existence and operation of the rational expectations phenomenon.

Reports, Accounting and auditing, Business enterprises

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Strategic auditing: an incomplete information model

Article Abstract:

A new study uses the game theoretic approach to determine strategies between auditors and clients.

United States, Brief Article

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