The Relationship between Financial Distress and Audit Opinion: A Study on Companies in Earthquake Zone

Recep Güneş; Ahmet Onay; Serdar Benligiray

Article Details

The Relationship between Financial Distress and Audit Opinion: A Study on Companies in Earthquake Zone

Authors:

Recep Güneş | Ahmet Onay | Serdar Benligiray

Publisher:

Manisa Celal Bayar University

Main Topics:

Denetim ve Mali Sorumluluk | Finansal Muhasebe | Kurumsal Yönetişim

Journal:

Yönetim ve Ekonomi Dergisi , pp.187-203

Document Type:

Article

Publication Date:

12/2023

Document Language:

Turkish

Document ID (Org No.):

2001305153

pISSN:

1302-0064

Keywords:

Abstract:

 Auditors are entrusted with significant responsibilities under auditing standards when confronted with uncertainties concerning the ongoing operations of client companies, as evidenced in their financial statements. The present study aims to determine the relationship between financial distress measured through the probability of bankruptcy score based on the financial data, and an audit opinion other than the standard unqualified opinion. This objective serves to reveal the performance of auditors in assuming such responsibility and to verify the effectiveness of a tool that has the potential to facilitate auditors work. On the other hand, the earthquake disaster guided the sample selection because it caused major problems that threatened the business continuity. Logistic regression analysis was adopted as the analytical method due to the categorical nature of the dependent variable. The findings indicate that financial distress is associated with being audited by major audit firms tested as the control variable, and with the companys profitability and accounts receivable turnover. The bankruptcy model used for measuring financial distress has the potential to be a unique tool that auditors and regulatory bodies can utilize. Key Words: Financial Failure, Audit Opinion, Shumway Model, Business Continuity JEL Classification: M40, D22, M42.

 Auditors are entrusted with significant responsibilities under auditing standards when confronted with uncertainties concerning the ongoing operations of client companies, as evidenced in their financial statements. The present study aims to determine the relationship between financial distress measured through the probability of bankruptcy score based on the financial data, and an audit opinion other than the standard unqualified opinion. This objective serves to reveal the performance of auditors in assuming such responsibility and to verify the effectiveness of a tool that has the potential to facilitate auditors work. On the other hand, the earthquake disaster guided the sample selection because it caused major problems that threatened the business continuity. Logistic regression analysis was adopted as the analytical method due to the categorical nature of the dependent variable. The findings indicate that financial distress is associated with being audited by major audit firms tested as the control variable, and with the companys profitability and accounts receivable turnover. The bankruptcy model used for measuring financial distress has the potential to be a unique tool that auditors and regulatory bodies can utilize. Key Words: Financial Failure, Audit Opinion, Shumway Model, Business Continuity JEL Classification: M40, D22, M42.

 Auditors are entrusted with significant responsibilities under auditing standards when confronted with uncertainties concerning the ongoing operations of client companies, as evidenced in their financial statements. The present study aims to determine the relationship between financial distress measured through the probability of bankruptcy score based on the financial data, and an audit opinion other than the standard unqualified opinion. This objective serves to reveal the performance of auditors in assuming such responsibility and to verify the effectiveness of a tool that has the potential to facilitate auditors work. On the other hand, the earthquake disaster guided the sample selection because it caused major problems that threatened the business continuity. Logistic regression analysis was adopted as the analytical method due to the categorical nature of the dependent variable. The findings indicate that financial distress is associated with being audited by major audit firms tested as the control variable, and with the companys profitability and accounts receivable turnover. The bankruptcy model used for measuring financial distress has the potential to be a unique tool that auditors and regulatory bodies can utilize. Key Words: Financial Failure, Audit Opinion, Shumway Model, Business Continuity JEL Classification: M40, D22, M42.

 Uluslararası denetim standartları, müşteri şirketin finansal tablolarında yer alan işletmenin sürekliliğine ilişkin bir belirsizlik karşısında denetçilere önemli sorumluluklar yüklemektedir. Bu çalışmanın amacı, şirketin finansal verileriyle hesaplanan iflas olasılığı skoru üzerinden ölçülen finansal başarısızlık ile denetim raporunda bildirilen standart olumlu görüş dışında bir denetim görüşü arasındaki ilişkiyi tespit etmektir. Bu amaç, bir yandan denetçilerin söz konusu sorumluluğu üstlenme noktasındaki performansının ortaya çıkarılmasını diğer taraftan denetçilerin işlerini kolaylaştırma potansiyeline sahip bir aracın etkinliğinin doğrulanmasına hizmet eder. Öte yandan işletmenin sürekliliğini tehdit eden büyük problemlere yol açtığı için deprem felaketi, örneklem seçimine yön vermiştir. Analiz yöntemi olarak bağımlı değişkenin kategorik bir değişken olması nedeniyle lojistik regresyon analizi benimsenmiştir. Bulgular, finansal başarısızlığın ve kontrol değişkeni olarak sınanan büyük denetim firmaları tarafından denetlenmenin, aktif karlılığının ve alacak devir hızının bağımlı değişkenle ilişkili olduğunu göstermiştir. Finansal başarısızlığın ölçümü için kullanılan iflas modeli, denetçilerin ve düzenleyici kurumların kullanabilecekleri özgün bir araç olma potansiyeline sahiptir. Anahtar Kelimeler: Finansal Başarısızlık, Denetim Görüşü, Shumway Modeli, İşletmenin Sürekliliği JEL Sınıflandırması: M40, D22, M42.

Article Details

The Relationship between Financial Distress and Audit Opinion: A Study on Companies in Earthquake Zone

Authors:

Recep Güneş | Ahmet Onay | Serdar Benligiray

Publisher:

Manisa Celal Bayar University

Main Topics:

Denetim ve Mali Sorumluluk | Finansal Muhasebe | Kurumsal Yönetişim

Journal:

Yönetim ve Ekonomi Dergisi , pp.187-203

Document Type:

Article

Publication Date:

12/2023

Document Language:

Turkish

Document ID (Org No.):

2001305153

pISSN:

1302-0064

Financial Failure

Audit Opinion

Shumway Model

Business ContinuityFinansal Başarısızlık

Denetim Görüşü

Shumway Modeli

İşletmenin Sürekliliği

Issues

Article Details

Authors: Recep Güneş | Ahmet Onay | Serdar Benligiray

Publisher: Manisa Celal Bayar University

Main Topics: Denetim ve Mali Sorumluluk | Finansal Muhasebe | Kurumsal Yönetişim

Journal: Yönetim ve Ekonomi Dergisi , pp.187-203

Document Type: Article

Publication Date: 12/2023

Document Language: Turkish

Document ID (Org No.): 2001305153

pISSN: 1302-0064

Issues

Authors:

Recep Güneş | Ahmet Onay | Serdar Benligiray

Publisher:

Manisa Celal Bayar University

Main Topics:

Denetim ve Mali Sorumluluk | Finansal Muhasebe | Kurumsal Yönetişim

Journal:

Yönetim ve Ekonomi Dergisi , pp.187-203

Document Type:

Article

Publication Date:

12/2023

Document Language:

Turkish

Document ID (Org No.):

2001305153

pISSN:

1302-0064