Auditors' going concern reporting accuracy during and after the global financial crisis

Motivated by concerns that one of the reasons for the Global Financial Crisis (GFC) is poor quality auditing, this study examines the accuracy of going concern modifications for a sample of United States (U.S.) companies in the pre-GFC (2005-2006), GFC (2007-2008), and post-GFC (2009-2010) periods. The results show that the type I misclassification is lower during the GFC but not different in the post-GFC period compared with the pre-GFC period. The type II misclassification is not significantly different in the GFC and post-GFC periods compared with the pre-GFC period. Additionally, the results suggest that non-Big 4 auditors, compared with Big 4 auditors, have become more conservative on clients' going concern problems in the post-GFC period, which reduces their type II misclassification.