| Paper Number | KCB-WP-2023-001 |
|---|---|
| Title | General Counsel in Top Management and Auditors’ Going-Concern Audit Opinion |
| Title(Other) | |
| Author | Byungjin Kwak ; Inho Suk ; Jaeyoon Yu |
| Publisher | |
| Abstract | This paper examines whether the role of corporate general counsel (CGC) in top management influences auditors’ going-concern assessment. Using a sample of financially distressed firms during the period between 2003 and 2018, we find that auditors are less likely to issue a going-concern audit opinion to firms with a CGC in top management (CGC firms) than those without a CGC in top management (non-CGC firms). Our results are robust to propensity score matching. Further analyses show that auditors’ type I error rates (false alarm) are lower for CGC firms than non-CGC firms whereas type II error rates (missed alarm) do not differ between the two groups. We also show that CGC firms are less likely to have material internal control weaknesses. This paper provides evidence that CGCs play an important role in auditors’ going-concern decision-making. |
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