Do auditors' opinions, industry factors and macroeco(17)

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4. Empirical Results 4.1. Estimation of Models

The descriptive statistics of variables are presented in Table 3. Out of total 20,030 observations, 7,217 firm-year observations (36.03 ) receive modified auditors’ opinions (Panel C of Table 3). Among various modified opinions, long term investment audited by other auditors (“other auditor”) is the most frequent (46.8754%), followed by Consistency (38.0768%).

Multivariate analysis results are presented in Table 4-1 to 4-3. Twenty-seven models are developed under different combinations of financial ratios, auditors’ opinions, macroeconomic factors, and electronic industry indicator. Table 4-1 shows the models with financial ratios and modified auditors’ opinions. Model 1 is the financial-ratio-only model, i.e., Ohlson (1980) model with coefficients re-estimated using our data. Among the auditors’ opinions studied, “going concern” and “long term investment audited by other auditors” (“other auditor”) consistently exhibit significant positive associations with the likelihood of bankruptcy in Taiwan economy. The finding on “going concern” opinion is consistent with prior literature using U.S. data (e.g., Hopwood et al. 1994; Sun 2007). The empirical result on “other auditor” confirms our expectation that profits from long term investment audited by other auditors possess lower earnings quality and firms with such profits are subject to

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