The Comparison of Factors Affecting Going－Concern Audit Opinion between Big4 and Non Big4 Auditors

In this study we compare the factors affecting going－concern audit opinion between Big4 and Non Big4 auditors. The smaller scale of auditors may take into account other factors than the bigger scale of auditors when they express going concern audit opinion to their financially distressed clients. In issuing going concern opinion the smaller scale of auditors may consider economic perspective more positively to survive their existence in the audit market than the bigger scale of auditors. We examine audit reports for 120 Korea Exchange listed companies entering into legal reconstruction during the years 2002－2017. Our research hypothesis is that there are significant differences on the factors affecting going concern audit opinion between Big4 and Non Big4 auditors. To verify our research hypothesis, we use a logistic regression where the type of audit opinion issued immediately prior to bankruptcy filing is dependent variable(GC) and audit tenure(SUC), company size(SCA), financial health(CUR, LIA), earning ability(ROA), cash supply from operating activity(OPE), bankruptcy lag(DIS), and type of security market listed(MAR) are independent variables. Our empirical results are as follows. First, in the case of Big4 auditors, the coefficient of LIA, ROA is significant. This result shows that Big4 auditors consider financial health and earning abililiy in expressing going concern audit opinion. Second, in the case of Non Big4 auditors, the coefficient of SCA, MAR is significant. This result shows that Non Big4 auditors consider company size and type of security market listed in expressing going concern audit opinion. Thus these results support that the factors affecting going concern audit opinion of Big4 auditors are different from those of Non Big4 auditors.