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Resumen:
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The aim of this PhD dissertation is to examine the external audit information of firms in the year prior to insolvency legal proceedings. We answer several research questions related to the association of auditing and financial distress situations. This topic is of interest in recent years because there has been an increasing number of bankruptcy failures due to the global financial crisis and some accounting scandals in which auditors failed to warn about imminent bankruptcies. First, we start by analyzing the utility of the accounting data during legal proceedings in Chapter 1, which entitles ‘The usefulness of financial information in the bankruptcy process’, and results show that financial information is fundamental to recognize early stages of a bankruptcy situation, so accounting data may help during the pre-bankruptcy phase or to shorten the costly legal process. Second, in Chapter 2 ‘The audit report: classification and analysis of emphasis of matter and qualification paragraphs’ we focus on the content of audit reports in the year immediately preceding bankruptcy and develop a codification of audit report disclosures, as there is not a commonly used classification of the content of audit reports in the literature. Our evidence indicates that auditors signal viability issues in the report in the form of emphasis of matter sections and qualification paragraphs. Moreover, qualifications are more frequently disclosed than matter sections and, regarding content, going concern uncertainties, initial phases of the legal process, accumulated losses and short-term financial investments’ valuation are the most recurrent comments. Third, using the codification created, in Chapter 3 ‘The content of the audit report in the year prior to bankruptcy filing. Empirical evidence from Spain’ we examine different features from the auditor and the audited firm that may affect the content of the report. Interestingly, we find that the propensity to issue disclosures is significantly different depending on auditor size, firm’s industry and financial condition, quarter on which the court order is imposed and type of resolution of the legal process...
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