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Evidence On Risk Changes Around Audit Qualification And Qualification Withdrawal Announcements, Neil L. Fargher, Michael S. Wilkins
Evidence On Risk Changes Around Audit Qualification And Qualification Withdrawal Announcements, Neil L. Fargher, Michael S. Wilkins
School of Business Faculty Research
Qualifications to an audit report may provide the basis for an auditor's claim that the user was warned about an unusual risk. If audit qualifications highlight changes in firm risk that are material, then the announcement of a qualification should be associated with an increase in the risk of the affected firm. In this paper, we test this proposition. Our initial tests do not detect a shift in systematic risk around qualification announcements; however, subsequent analysis shows that firms announcing recurring material uncertainties have higher levels of systematic risk than firms announcing initial qualifications. Furthermore, we document a significant decrease …
Timely Industry Information As An Assurance Service: Evidence On The Information Content Of The Book-To-Bill Ratio, Neil L. Fargher, Larry R. Gorman, Michael S. Wilkins
Timely Industry Information As An Assurance Service: Evidence On The Information Content Of The Book-To-Bill Ratio, Neil L. Fargher, Larry R. Gorman, Michael S. Wilkins
School of Business Faculty Research
Assurance services include independent professional services that improve the quality of information. Once such service is the collection of confidential information from participating firms on behalf of an industry association and the release of summarized information to investors. An example of this type of service is the collection of industry-wide information for the Semiconductor Industry Association. The primary output from this process is the monthly release of a ratio of new orders received to chips shipped, known as the book-to-bill ratio.
We evaluate the association between book-to-bill disclosures and common stock prices. Statements in the financial press suggest that the …