Audit Opinion and Earnings Management: Uncertainty in Going-concern

Document Type : Research Paper


1 Assistant Prof., Faculty of Management, University of Tehran, Tehran, Iran

2 Assistant Prof., Faculty of Management & Accounting, University of Shahid Beheshti, Tehran, Iran

3 M.S Student of Accounting, Faculty of Management, University of Tehran, Tehran, Iran


This study investigates the relationship between earnings
management and audit opinions. Qualified audit opinions are divided
in two categories: 1. qualified because of uncertainty in going-concern,
and 2. qualified because of other reasons. Earnings management is
measured by discretionary accruals with Jones model, adjusted Jones
model and Kothari et al. model. Logistic regression model is used.
Sample includes firms listed in Tehran Stock Exchange (TSE) during
2007 to 2013. Findings show that there is positive relation between
qualified opinions because of uncertainty in going-concern and
earnings management. But, there is no relation between earnings
management and qualified opinions because of other reasons. It means
that uncertainty in going-concern increases audit risk and probability
of issuing of qualified opinion for reporting of earnings management.