H. H. Li

The Information Contents of Modified Unqualified Audit Opinions under the Control of Concurrent Information: The Case of Taiwan

This paper addresses this type of opinions as the ”modified unqualified audit opinion.” SAS 33 lets the auditor issue a modified audit opinion for situations where a qualified audit opinion is called for traditionally before the SAS 33 era. It attempts to assess the valuation impact of SAS 33 on the Taiwan stock market under the control of concurrent information by applying the Ohlson model. This study found that a significant negative association existed between stock price and the modified unqualified audit opinion issued under any one of the following five scenarios or circumstances: (1) going concern consideration, (2) change in the application of accounting principles for financial reporting as required under the law, (3) change in the application of accounting principles for financial reporting on a voluntary basis, (4) uncertainty of events that may have significant impact on the future financial condition of the firm, and (5) the adoption of another auditors audit report for the current year audit. Of the five circumstances mentioned above, the one based on the going concern consideration had the highest significant impact on stock prices and the application of different accounting principles between two reporting periods and the uncertainty of events that may affect the future financial condition of the firm is the next.