Business Commons^™

The Information Content Of Withdrawn Audit Qualifications: New Evidence On The Value Of "Subject-To" Opinions, L. Paige Fields, Michael S. Wilkins

Michael S Wilkins

Statement on Auditing Standards No. 58 (AICPA 1988) effectively eliminated the "subject-to" audit opinion which auditors used to highlight financial statement uncertainties. Elimination of the "subject-to" report implied the Auditing Standards Board's belief that the opinion conveyed no material information to users. Several market-based studies of the value of "subject-to" opinions have yielded mixed results. A major limitation in most of these studies was a lack of precision in identifying the exact date upon which information, if any, was revealed to the market.

This study extends the previous work by examining the common share price reactions to public announcements of …

An Empirical Investigation Of Stock Dividends-In-Kind, L. Fields, Michael Wilkins

Michael S Wilkins

We investigate share price reactions to announcements of dividends payable in the common stock of corporations different from the issuing firm. We find that firms that declare these dividends (typically investment companies) experience positive abnormal returns upon announcement. We also find that such dividends are more likely to be declared when the shares to be distributed have peaked in value. Consistent with this finding, we document negative announcement-period abnormal returns for firms having their shares distributed. Additional tests reveal that prices respond more negatively when the information signal is strongest, when outside ownership is more dispersed, and when management is …