EuroEconomica, Vol 31, No 2 (2012)

Effect of Audit Opinion on Stock Prices: Theoretical Analysis

Arber Hoti, Hysen Ismajli, Skender Ahmeti, Arben Dermaku


Research concerning price reaction to audit report disclosures concentrates on the announcement effect. Extensive studies show that, in general, the market responds negatively to qualified opinions. Some studies examine medium-term performance subsequent to the disclosure of qualified reports. A number of factors may be associated with returns around the audit report and report announcement days. We consider three sets of factors: company-specific characteristics, insider ownership and behavior, and auditor's reputation and opinions.


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