The price reactions to corrective disclosures often serve as a benchmark for settlements in securities class action lawsuits. When the firm bears litigation costs, this benchmark creates a feedback effect that exacerbates the price reaction to news that contradicts managers' earlier reports....

We examine two distinct channels through which going concern opinions can be associated with the likelihood of bankruptcy: auditors have better access to information about their clients' bankruptcy risk and going concern opinions directly induce bankruptcies. Using a bivariate probit model that...

We examine two distinct channels through which going concern opinions can be associated with the likelihood of bankruptcy: auditors have better access to information about their clients' bankruptcy risk and going concern opinions directly induce bankruptcies. Using a bivariate probit model that...