Determinants factors of a going concern audit opinion: A risk governance and regulation implication

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Abstract

International Standards on Auditing (ISAs) mandate auditors to evaluate the client’s capability to sustain her/his operations for a reasonable period after the financial statement’s date (Geiger et al., 2021). The current study examines the determinants predicting going concern audit opinions (GCAOs) for the period from 2018 to 2022. Data was collected manually through the financial reports and the external auditor’s report published on the website of the Amman Stock Exchange (ASE). Using binary logistic regression, profitability and liquidity were found to have a significant inverse impact on GCAOs, while leverage showed a positive impact. Unexpectedly, audit lag did not show a significant impact on GCAOs. The findings highlight the important role of financial indicators in evaluating the going concern assumption. The results are robust to concerns the determinants of a going concern audit opinion and provide valuable insights to academics, shareholders, companies, and regulators from a developing market. This study recommends that managers need to take these relationships into account when making strategic decisions.

Keywords: Going Concern Audit Opinion, Audit Lag, External Auditor, Liquidity, Financial Leverage

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: M41, M48, M49

Received: 21.02.2024
Revised: 09.07.2024; 27.08.2024; 18.09.2024
Accepted: 10.10.2024
Published online: 03.03.2025

How to cite this paper: Altawalbeh, M. A. (2025). Determinants factors of a going concern audit opinion: A risk governance and regulation implication [Special issue]. Risk Governance & Control: Financial Markets & Institutions, 15(1), 188–196. https://doi.org/10.22495/rgcv15i1sip4