Abstract
The evaluation of going-concern uncertainties and the issuance of going-concern modified audit opinions (GCOs) continue to be of significant interest to the public and the accounting profession. We examine the association between the abnormal tone of disclosures in 10-K filings and GCOs using data from the years 2000 to 2014. We find that abnormal positive disclosure tone is associated with a higher likelihood of a GCO. We also find that the abnormal tone of disclosures is associated with lower type II and type I errors for GCOs (i.e., bankrupt companies without a prior GCO and GCOs without subsequent failure, respectively).
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