INTRODUCTION
T HE NECESSITY OF THE REPORT
Financial statements are crucial for businesses as they provide insights into financial information, position, and performance, serving as a key resource for investors to analyze and make informed decisions According to Yu (2013), the primary users of financial statement information include investors, governments, employees, customers, and the public However, a disconnect exists between the expectations of business managers and the users regarding the accuracy and reliability of these statements To address this gap, independent audits were implemented to ensure that external users can trust the information presented in financial statements.
Independent audit activities are crucial in the market economy, serving as a vital tool for providing objective and honest information to users for informed decision-making The audit opinion, a key component of financial reporting, plays a significant role in ensuring the sustainability and stability of the economy This opinion reflects the independent auditor's assessment of a client's financial position and is relied upon by various stakeholders for their decisions Furthermore, the audit opinion not only indicates compliance with accounting standards and a commitment to sound financial management but also acts as a critical measure in preventing fraudulent activities.
The stock market plays a crucial role in the capital market, drawing numerous individuals and organizations to invest In many countries, including Vietnam, companies listed on the stock exchange are required to have their financial statements audited These financial statements significantly impact investor decisions and, consequently, stock market prices This article explores the influence of audit opinions on stock market prices.
Empirical research in companies listed on the Ho Chi Minh Stock Exchange" as my graduate thesis research topic.
T HE AIM OF THE THESIS
The study's overall objective is to identify the influence of the type of audit opinion on stock price changes
Empirical evidence highlights the significant impact of various audit opinions on stock prices and investor decision-making in Vietnam Unqualified opinions, particularly those with emphasis and "other matters" paragraphs, can enhance investor confidence, leading to positive stock price reactions Conversely, qualified opinions often signal potential risks, resulting in negative market responses and influencing economic decisions among investors Understanding these dynamics is crucial for assessing the implications of audit opinions on financial markets in Vietnam.
T HE RESEARCH QUESTIONS
Firstly, how does the stock price change for the audit opinion that is the unqualified opinion with the emphasis and "other matters" paragraphs?
Secondly, how does the share price change for the audit opinion that is the qualified opinion?
O BJECT AND SCOPE OF THE RESEARCH
This study examines the relationship between audit opinions in the audit reports of companies listed on the Ho Chi Minh Stock Exchange (HOSE) and the resulting volatility of their stock prices.
The scope of the research is companies listed on the Ho Chi Minh Stock Exchange (HOSE) for four years, from 2018 to 2021, and currently trading.
M ETHODOLOGY
To achieve the research objectives of the topic and respond to the questions posed, the research uses mainly quantitative methods The study also uses analytical and synthesis techniques
The Conceptual framework of research issues and related studies is a basis for proposing audit opinions that may influence investors' decision-making
The research primarily relies on primary data gathered from audit opinions and the publication dates of audit reports for non-financial companies listed on the Ho Chi Minh Stock Exchange The analysis focuses on stock market prices, specifically the VN-Index, during the 107 days leading up to the publication date, the publication date itself, and the seven days following the report's release This data will be meticulously processed using Excel spreadsheets.
Then, they were analyzed and processed with the statistical software SPSS to eliminate the outliers and normalize variables before data analysis
The research hypothesis will be tested using the T-TEST.
C ONTRIBUTION OF THE THESIS
This study provides valuable insights into how audit opinions impact stock market prices and the overall market reaction to these opinions.
This study provides empirical evidence highlighting the impact of audit opinions on investor decisions by analyzing stock price volatility The findings emphasize the significance of audit reports as a valuable information source for financial statement users, aiding them in their decision-making processes Additionally, the research offers insights into market reactions based on the information presented in audit reports, reinforcing their importance in investment strategies.
T HE PROPOSED LAYOUT OF THE THESIS
This chapter outlines the rationale for selecting the research topic and highlights the importance of empirical evidence and practical application in shaping the research objectives and thesis focus It also defines the research subject and scope, clearly articulating the scientific and practical contributions of the thesis.
OVERVIEW OF THE RESEARCH FIELDS
F OREIGN RESEARCH
Most audit opinion research can be categorized into two main areas: experimental studies and market-based studies Experimental studies focus on how decision-makers, such as credit managers and financial analysts, react to different types of audit opinions In contrast, market-based studies utilize archival data to analyze stock market responses to the timing of audit report disclosures (Galloppo, 2015).
Gul (1990) conducted an empirical study examining how unqualified and qualified audit opinions affect estimated stock prices in Australia, involving 34 bank employees aged 29-45 with extensive managerial accounting experience Participants received identical information paired with either an all-acceptance or an exception, and were tasked with estimating a hypothetical company's stock price Utilizing the ANOVA Test, the findings revealed that qualified audit opinions negatively impacted stock price volatility Similarly, Al-Othman (2019) explored the stock price reactions of service companies listed on the Amman Stock Exchange from 2010 to 2017.
A total of 37 service companies are listed on the ASE, with notable changes in audit report types from unqualified to qualified and vice versa Specifically, there were 48 instances of reports changing from unqualified to qualified and 16 instances changing in the opposite direction The findings revealed a statistically significant decline in stock prices following the shift from unqualified to qualified reports, while no significant changes were observed in stock prices when reports transitioned from qualified to unqualified.
Bessel et al (2003) conducted a study to investigate auditors' opinions on the going concern assumption in unqualified opinions in Australia They surveyed 500 members of the Institute of Banking and Finance using questionnaires and various audit reports, including "Except" and "Emphasis of Matter." The study aimed to determine if auditor modifications in Australia provide valuable information to users The findings revealed that for financially distressed companies, such modifications do not significantly improve risk perception or decision-making.
Dionisijev (2021) examined the influence of audit opinions on stock price fluctuations in the Macedonian stock exchange, focusing on companies in the Republic of North Macedonia The study incorporated two control variables: net profit and company size, analyzing a sample of companies listed on the exchange The findings revealed that audit opinions have an insignificant impact on stock prices, indicating that investors do not factor in audit opinions during their decision-making processes.
Al-Thuneibat et al (2008) examined the impact of qualified audit opinions on stock prices and earnings in Jordan, analyzing 42 observations from joint stock companies between 2000 and 2005 Their findings revealed no significant influence of qualified opinions on stock prices or earnings, contributing new insights into the effects of audit opinions in a developing country The researchers emphasized the importance of enhancing users' awareness regarding the role of audit reports.
A study conducted in 2011, mirroring the work of Al-Thuneibat et al (2008), examined the impact of audit opinions on stock prices and earnings of joint stock companies in Iran from 2005 to 2009 Analyzing data from one week before to one week after the financial statement publication, the findings revealed that qualified audit opinions did not significantly influence stock prices or earnings This suggests that the information conveyed in qualified opinions may not be understood or valued by users of audit reports in Iran.
Galloppo (2015) examines the reactions of Italian investors to different types of audit opinions—qualified and unqualified—highlighting their implications for operational continuity and financial health Utilizing event research and market modeling, the study assesses stock market responses to audit reports by analyzing extraordinary returns for shareholders, grounded in Fama's (1969) efficient market hypothesis With a sample of 97 companies from 2007 to 2010, the research reveals that audit reports provide critical information to investors, indicating that qualified opinions negatively affect stock prices, while unqualified opinions positively influence them Similarly, Pieris and Kawshalya (2021) investigate stock market reactions to auditor opinions among listed companies in Sri Lanka, finding significant immediate impacts on share prices when audit reports are qualified However, their analysis indicates that unqualified opinions, even with a focus on matter paragraphs, do not significantly affect share prices or returns on the event date.
Arifuddin (2017) investigated the effects of company size, profitability, and audit opinion on audit report lag among registered manufacturing companies on the Indonesia Stock Exchange, analyzing data from 135 firms over the period of 2013 to 2016 The findings indicated that companies receiving unqualified audit opinions experienced shorter audit report lags, as they are motivated to promptly disclose their financial statements, viewing unmodified opinions as favorable news Conversely, companies with qualified opinions faced longer audit reporting delays due to the additional time and effort required for auditors to complete their procedures Similarly, Yuyanti et al (2020) examined the impact of company size, profitability, leverage, and audit opinion on audit delay in the mining sector, with a focus on audit quality as a moderating factor, using quantitative methods on a population of mining companies listed on the Indonesia Stock Exchange from 2014 to 2018 The study employed purposive sampling to select its sample size.
91 companies The study once again confirms that audit opinion has a negative impact on reporting lag.
D OMESTIC RESEARCH
A study by Bùi Thị Năm (2017) examines the impact of audit opinions on stock price volatility, focusing on qualified and emphatic opinions related to going concerns and financial uncertainty Utilizing an event window method and market model, the research analyzes 118 audit reports from 58 companies listed on the Ho Chi Minh Stock Exchange between 2012 and 2016 The event window spans 11 days, including five days before and after the audit report signing, with a 150-day estimated window preceding it The findings indicate that neither type of audit opinion significantly affects stock price volatility, as evidenced by extraordinary earnings.
In 2018, Lê Thị Mai Anh conducted a study examining the impact of audit opinions and the affiliation of audit firms (Big 4 vs Non-Big 4) on stock market price changes Building on research by Mihaela Alina Robua and Ioan Bogdan Robu from 2013 in Romania, this study utilized regression testing on a sample of 276 from 2015 The findings diverged from Robua's conclusions but aligned with those of Bùi Thị Năm, revealing that the two types of audit opinions did not significantly influence stock price volatility, and that the audit reports from both Big 4 and Non-Big 4 firms did not affect stock prices.
Nguyễn Thị Thương (2015) examined how dividend policy influences stock price fluctuations among 98 companies listed on the Ho Chi Minh Stock Exchange from 2007 to 2013 The study's correlation and least squares analyses revealed a negative relationship between dividend rates and payout ratios with stock price changes Specifically, it was found that decreases in dividend and payout ratios lead to increases in stock price changes, and vice versa Additionally, the research incorporated extended control variables, such as firm size, to further assess their impact.
CONCEPTUAL FRAMEWORK
The concept and purpose of auditing financial statements
Auditing involves gathering and assessing evidence to evaluate how well information aligns with established criteria It is essential that audits are conducted by a qualified and independent professional to ensure objectivity and accuracy.
A financial statement audit involves qualified auditors and auditing firms, including foreign branches in Vietnam, evaluating the accuracy and reasonableness of key aspects of the financial statements of the entities being audited, in accordance with the auditing standards outlined in Independent Audit No 67/2011/QH12.
Under Viet Nam auditing standards VSA 200, the primary objective of a financial statement audit is to enhance user confidence by providing an auditor's opinion on the adherence of financial statements to the applicable reporting framework The auditor must determine whether the financial statements are fairly presented in all material respects according to the relevant financial reporting standards Conducting the audit in accordance with Vietnamese Standards on Auditing and applicable ethical regulations is essential for forming a reliable audit opinion.
The audit report serves as the essential communication link between auditors and users of financial statements, highlighting the key findings of the audit process This report is vital for conveying the results of the audit, ensuring that stakeholders receive clear and accurate information regarding the financial statements.
The types of audit opinions of financial statements
On December 6, 2012, the Ministry of Finance established 37 Vietnamese Auditing Standards (VSA) aligned with International Auditing Standards (IAS), which took effect on January 1, 2014 This Circular outlines the VSA framework applicable to auditing enterprises, foreign audit branches operating in Vietnam, practicing auditors, and relevant organizations and individuals involved in providing independent audit services.
An audit opinion is the outcome of an audit of financial statements, essential for ensuring the transparency and accuracy of financial information for enterprises and users According to VSA 700 and VSA 705, there are two primary types of audit opinions.
The unqualified opinion (Unmodified opinion): An opinion expressed when the
Auditor concludes that the financial statements have been prepared, in all material respects, by the reporting framework applicable to financial statements (According to VSA 700)
The Qualified opinion (Modified opinion): This Auditing Standard prescribes and guides three types of audit opinions: Qualified opinions, Adverse Opinions, and Disclaimer of Opinion:
Qualified opinion: The Auditor shall express a qualified opinion when: The
An auditor may determine that misstatements in financial statements are material but not pervasive after obtaining sufficient appropriate audit evidence Alternatively, if the auditor cannot gather enough evidence to form an opinion, they may conclude that undetected misstatements could potentially be material, though not pervasive, to the financial statements.
Adverse Opinion: The Auditor shall express an adverse opinion when the
Auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements
An Auditor will issue a disclaimer of opinion when they are unable to gather sufficient and appropriate audit evidence to form a basis for their opinion This situation arises when the Auditor determines that any undetected misstatements could have material and pervasive effects on the financial statements.
In exceptionally rare cases, an Auditor may issue a disclaimer of opinion when faced with multiple uncertainties This occurs when, despite having gathered sufficient and appropriate audit evidence for each individual uncertainty, the Auditor finds it impossible to form a definitive opinion on the financial statements This inability arises from the potential interaction and cumulative impact of these uncertainties on the overall financial statements.
According to VSA 706, the "Emphasis" and "Other matters" paragraphs are in the Auditor's opinion on the financial statements.:
The "emphasis" paragraph in the audit report highlights a significant matter disclosed in the financial statements, which the Auditor believes is crucial for users to comprehend the financial information accurately.
The "Other Matter" paragraph in an Auditor's report highlights additional information beyond the financial opinion, deemed significant by the Auditor This section aims to enhance users' understanding of the audit process, the Auditor's responsibilities, and the overall audit report.
O VERVIEW OF THE S ECURITIES M ARKET
3.2.1 The conception of the Securities market
The stock market plays a vital role in the capital market by channeling small savings from individuals into long-term funding for businesses, economic organizations, and state projects, thereby fostering production development and economic growth.
According to Article 27 of the Securities Law, the securities market serves as a platform for trading and information exchange Initially, transactions occur in the primary market where buyers purchase securities directly from issuers Subsequently, in the secondary market, these issued securities are resold Thus, the stock market functions as the venue for both the issuance and exchange of securities.
Securities serve as proof of ownership rights and interests in the assets or capital of the issuing entity, encompassing various forms such as stocks, bonds, investment fund certificates, and derivatives This article focuses specifically on stocks, providing an in-depth exploration of this particular type of security while excluding discussions on other forms of securities.
The history of shares is closely tied to the emergence of joint stock companies, as shares are the primary product of these entities According to the law on securities No.54/2019, shares are defined as securities that affirm the holders' legal rights and interests in a portion of the issuer's share capital When a company is formed, its charter capital is divided into equal parts known as shares, with buyers becoming shareholders These shareholders receive certificates of ownership, referred to as stocks, which confirm their stake in the joint-stock company The extent of a shareholder's ownership corresponds to the number of shares they possess, making stocks a type of equity security.
Generally, in countries, when considering shares of a joint-stock company, people must distinguish between authorized shares, issued shares, treasury shares, and outstanding shares (Bạch Đức Hiển, 2008)
When establishing a joint stock company, issuing shares is permitted to raise capital Legally, the company must register the total number of shares, which should be detailed in the company's charter and referred to as authorized or registered shares.
Issued shares are the number of shares issued by the company to investors; it is less than or maximum equal to the number of shares allowed to be issued
Treasury shares are shares of the company that have been issued, but for specific reasons, the company spends money to buy back some of its shares
Outstanding shares are shares that have been issued and held by shareholders
Shares can be classified into two main types based on the benefits they provide to holders: common shares and preferred shares.
Common shares are the most popular shares of a joint stock company
Shareholders of this stock enjoy the freedom to transfer their shares, possess full voting rights during the General Meeting of Shareholders, and are entitled to receive dividends based on the company's performance and the value of their holdings.
Preference shares are ownership certificates in a company that grant holders preferential rights over common shareholders These holders, known as preferred shareholders, enjoy specific advantages, making preference shares a valuable investment option.
In the scope of the article's research, the author only focuses on common stocks.
F OUNDATIONAL THEORIES
Agency Theory explores the dynamics between business principals, such as owners, and their agents, typically managers, who are entrusted with specific management rights to act in the best interests of the owners.
The agency theory, proposed by Jensen and Meckling in 2019, defines the agency relationship as a contractual arrangement between shareholders and agents In this framework, shareholders appoint agents to manage the company on their behalf, granting them the authority to make decisions regarding the enterprise's assets.
The conflict of interest between managers and owners arises from their differing objectives; owners seek to maximize the business's market value, while managers focus on short-term goals like increasing sales and profits to enhance their compensation and reputation According to Agency Theory, this misalignment can lead to situations where managers do not act in the best interests of shareholders, especially when there is incomplete and asymmetric information between the principal and the agent.
To minimize conflicts of interest between shareholders and company managers, it is essential to implement appropriate mechanisms One effective method is the engagement of an independent third party to conduct audits, which helps ensure the accurate preparation and presentation of financial statements (FSs) and reduces the risk of misrepresenting the company's financial position and business performance.
The theory emphasizes the vital importance of the audit report as a key resource for users and investors, enabling them to gain a clearer understanding of financial statements and make informed decisions.
Asymmetric information theory, which gained prominence in the 1970s, solidified its significance in modern economics when George Akerlof, Michael Spence, and Joseph Stiglitz were awarded the Nobel Prize in Economics in 2001 for their contributions to the field.
Asymmetric information arises when transaction parties deliberately hide information, leading to market prices that deviate from equilibrium, either too low or too high For instance, a buyer lacking accurate, complete, and timely information may pay less than the true value of goods Consequently, sellers are discouraged from producing or supplying goods of quality below the market average (Akerlof, Michael Spence, 1973).
In the last twenty years, asymmetric information markets have gained significant importance in modern economics, particularly as weak information transparency and access exacerbate the issue To effectively reduce asymmetric information, the presence of an independent monitoring party is essential for overseeing the information flow.
Applying this theory to explain the reasons for stock price volatility There are many factors in the audit report that affect stock market volatility; one is the audit opinion.
METHODOLOGY
T HE METHODOLOGY AND RESEARCH IMPLEMENTATION PROCESS
This study aims to investigate the relationship between different types of audit opinions—specifically unqualified audit opinions with emphasis and qualified audit opinions—and their impact on the market share prices of companies listed on the Ho Chi Minh Stock Exchange (HOSE) Utilizing a quantitative approach, the research employs the event study method to analyze these dynamics effectively.
The event research method is a quantitative approach used to assess the impact of specific events, such as audit opinions, on market performance It focuses on analyzing abnormal returns, particularly in the stock market, by comparing expected returns in the absence of the event to actual returns following its occurrence This method provides valuable insights into how different types of audit opinions, including unqualified opinions with emphasis and qualified opinions, influence investor behavior and market dynamics.
Event research, pioneered by Fama et al in 1969, investigates how stock markets respond to significant events such as changes in accounting policies, profit announcements, and dividend declarations This methodology measures stock price reactions to specific events or disclosures, serving as a tool to test stock market hypotheses that assert the efficient reflection of information in stock prices It particularly examines the impact of published information on the financial status of shareholders holding company securities Event studies are commonly employed to analyze stock market reactions to various audit opinions when companies release audited financial statements, focusing on the measurement of abnormal returns during the event window.
As shown above, the author uses an event research methodology to conduct this study, so the research process is defined to consist of steps as follows:
This article begins by summarizing prior research on the effects of audit opinions—specifically unqualified and qualified opinions—on stock markets globally and in Vietnam It systematically reviews foundational theories related to measuring market reactions to these audit opinions, identifies existing research gaps, and proposes new research models to address these gaps.
The second step , perform event research with the following steps:
To evaluate the influence of audit opinions on stock prices, the key event to consider is the release of the audit report.
Next is to define the event date, set the event window, and the estimate window
The event date is crucial for assessing the impact of audit opinions on share market prices and abnormal returns, as it marks the point when changes in these prices occur In Vietnam, public companies are required to disclose their audited annual financial statements within ten days of the independent auditors signing the audit report, with a maximum disclosure period of 90 days following the fiscal year-end This information must be made available through the company's website, the State Securities Commission's information disclosure system, and the Stock Exchange website.
Exchange; the Website of the Securities Depository Center; Other mass media according to legal regulations (printed newspapers, electronic newspapers) (Articles 5,
According to Circular 155/2015/TT-BTC, dated October 6, 2015, the event date is defined as the date when the financial statements are publicly announced on the Ho Chi Minh Stock Exchange website.
Finally, determine the expected return of each stock from which to determine the abnormal profit
The third step collects data for quantitative research Data for this study are audit reports of companies listed on HOSE and stock market data of companies from
In the fourth step, the gathered data will be processed and calculated using essential parameters for the study through Excel spreadsheets, followed by analysis with the statistical software Stata.
The fifth step is to analyze and discuss the results obtained to make comments and suggestions.
RESEARCH RESULTS
D ATA ANALYSIS AND R ESEARCH FINDINGS
Table 5.1 illustrates the distribution of observations by year and audit opinion type within the sample The findings indicate that audit reports featuring two opinion types represent a minor fraction of the overall reports issued.
The study analyzed audit opinions from 393 companies listed on HOSE as of August 1, 2022, excluding financial institutions and those with fiscal years differing from December 31 Audit reports were collected from 363 of these companies, revealing that from 2018 to 2021, the percentage of companies receiving unqualified audit opinions ranged from 85.4% to 94.77% In contrast, qualified opinions accounted for 2.2% to 4.4%, while unqualified opinions with emphasis paragraphs varied between 1% and 8.5% annually Throughout the research period, there were 104 observations, comprising 53 qualified opinions and 51 unqualified opinions with emphasis paragraphs.
The study analyzes stock price data from 66 companies, focusing on 96 audited reports from 2018 to 2021, after excluding 8 companies with incomplete data Among these observations, 49 reports received qualified opinions, representing 51.04%, while 47 reports had unqualified opinions with an emphasis paragraph, accounting for 48.96% Notably, the research does not address Adverse opinions or Disclaimers of Opinion during the specified period.
From 96 observations, the author collects data on audit opinion - research events and the publication date of this audit report to the public, which is posted on the Ho Chi Minh Stock Exchange website (HOSE) The results are summarized in Table 5.2
Table 5.2: Summary of events and event dates during the study period
Serial Ticker Event Date of publication Serial Ticker Event Date of publication
Serial Ticker Event Date of publication Serial Ticker Event Date of publication
Serial Ticker Event Date of publication Serial Ticker Event Date of publication
Serial Ticker Event Date of publication Serial Ticker Event Date of publication
In which: UQU= Unqualified opinion with emphasis; QUA= Qualified opinion
The study utilizes daily share prices of listed companies and the VN-Index from the Ho Chi Minh Stock Exchange as its second data source These stock prices serve as the foundation for conducting OLS regression, which calculates each company's alpha and beta indices In this regression model, the independent variable is the actual daily return of each stock, while the dependent variable is the daily return of the VN-Index during the estimation window Results of the alpha and beta coefficients for each stock throughout the research period are presented in Table 5.3.
Table 5.3: Summarize the alpha, and beta coefficients of each stock in the research period
Table 5.3 summarizes the alpha and beta coefficients of each stock over the years, calculated using the market model based on the VN-Index returns These coefficients are derived from an OLS regression model, utilizing 100 days of daily closing prices for the stocks in the sample alongside the market index The alpha coefficient, representing the stock's return when the market return is zero, and the beta coefficient, indicating the stock's return change in response to a 1-unit change in market return, serve as essential metrics for estimating each stock's expected return.
R ELATIONSHIP BETWEEN TYPES OF AUDIT OPINION AND STOCK PRICE
This section presents research findings on how different types of audit opinions impact stock prices, specifically by analyzing abnormal returns derived from alpha and beta coefficients The analysis utilizes Excel spreadsheets and SPSS software to rigorously test the hypothesis.
Table 5.4 displays the t-test results for the average abnormal return (AAR) during the event window, which spans seven days before and after the financial statement disclosure date with the Ho Chi Minh Stock Exchange The analysis is based on 11 observations, as there are no data points available on weekends, which consist of five days each week The results indicate a mix of positive and negative AARs, suggesting an absence of a definitive pattern in stock reactions.
Table 5.4: The results of calculating average abnormal return
In which A=Qua: Qualified audit opinion, B=Unq: Unqualified audit opinion with emphasis regarding uncertainty about continued performance or financial crisis
Figure 5.1: Average abnormal return in the event window
5.2.1 Effect of the qualified audit opinion on stock prices
Table 5.5 displays the t-test results for average abnormal income during an 11-day event window, which encompasses five days prior to the publication of the audit report, the publication date itself, and five days following the publication, specifically focusing on the qualified audit opinions analyzed in this thesis.
Table 5.5: The average abnormal return summary table in the event window for the qualified audit opinion
N Mean Std Deviation Std Error Mean
Table 5.6: T-test results for average abnormal return day by day in the event window for the qualified opinion
Test Value = 0 t df Sig (2- tailed)
95% Confidence Interval of the Difference
Tables 5.5 and 5.6 detail the daily average abnormal returns and t-test results for qualified audit opinions The findings indicate that average abnormal returns (AAR) fluctuated between positive and negative values during the event window, ultimately reflecting a significant negative impact on stock prices immediately following the audit report's publication Notably, the stock prices continued to decline for two subsequent days However, with p-values exceeding 0.05—except for three days prior to the audit report—it can be inferred that while the market reacts promptly to the publication, the resultant changes in stock prices are statistically insignificant.
The impact of qualified opinions on stock prices and abnormal returns is analyzed throughout the event window, utilizing a T-test to evaluate hypothesis H1 The findings are detailed in Tables 5.7 and 5.8.
Table 5.7: CAAR in the event window for the qualified opinion
N Mean Std Deviation Std Error Mean
Table 5.8: T-test results for CAAR of all companies in the total event window for qualified opinion
95% Confidence Interval of the Difference
The analysis of tables 5.7 and 5.8 reveals that a qualified audit opinion negatively influences stock prices, indicated by a CAAR value of -0.02299 However, this effect is deemed insignificant, as the P-value of 0.390 exceeds the 0.05 threshold, leading to the conclusion that the null hypothesis cannot be rejected Therefore, it is evident that there is no significant impact of qualified audit opinions on stock price fluctuations.
To assess the impact on Cumulative Average Abnormal Returns (CAAR) during the short-term window surrounding the event date, the author employs symmetric pairs of days around the audit report publication date, utilizing the T-test for analysis The findings are detailed in Table 5.9.
Table 5.9: T-test results for CAAR pairs of symmetric dates around event dates for qualified opinions
95% Confidence Interval of the Difference
As appears from table 5.9, CAAR receives a few negative values containing during the period T(-5)-T(+5), T(-3)-T(+3), T(-1)-T(+0), and only the period T(-3)-
The analysis reveals that T(+3) has a p-value of less than 0.05, indicating that a qualified audit report negatively affects stock market prices during this specific period Conversely, the p-values for all other periods exceed 0.05, suggesting that qualified audit opinions do not significantly influence share prices or returns for the majority of the testing duration.
5.2.2 The effect of the unqualified audit opinion with the emphasis paragraph on the share price
The author summarizes the impact of unqualified audit opinions on stock market performance, specifically testing the H2 hypothesis The t-test results reveal the average abnormal income during an event window of 11 days, which includes 5 days before, the day of, and 5 days after the audit report publication Detailed findings are illustrated in Table 5.10 and Table 5.11.
Table 5.10: Average abnormal return summary table in event window for unqualified opinion with emphasis paragraph
Date N Mean Std Deviation Std Error Mean
Table 5.11: T-test results for average abnormal return day by day in the event window for the unqualified opinion t df
95% Confidence Interval of the Difference
The Average Abnormal Return (AAR) primarily exhibited negative values throughout the event, with the exception of three days surrounding the release of the audit report This indicates that the negative perception of the unqualified audit opinion, particularly with the emphasis paragraph, influences stock prices and abnormal returns Following the publication of the audit report, the AAR recorded a value of -0.00603, indicating a negative reaction, but the p-value of 0.127 remained above the 0.05 threshold, suggesting that while stock prices respond to the audit opinion upon release, the change is not statistically significant.
This study aims to analyze the effect of unqualified audit opinions on the stock prices of companies listed on the Ho Chi Minh Stock Exchange By testing hypothesis H2, the research calculates the cumulative average abnormal return (CAAR) over the entire event window, utilizing a T-test for hypothesis validation The findings are detailed in Tables 5.12 and 5.13.
Table 5.12: CAAR in the event window for unqualified audit opinions with emphasis paragraph
N Mean Std Deviation Std Error Mean
Table 5.13: T-test results for CAAR of all companies in the total event window for unqualified audit opinions with emphasis paragraph
95% Confidence Interval of the Difference
The CAAR of -0.07994 indicates a negative reaction of stock prices to unqualified audit opinions with emphasis However, this effect is not statistically significant, as evidenced by a p-value of 0.136, which exceeds the 0.05 threshold Consequently, hypothesis H2 is rejected, suggesting that unqualified audit opinions with emphasis do not have a significant impact on stock prices.
This article examines the influence of audit opinions on stock prices over a short timeframe, utilizing Cumulative Average Abnormal Returns (CAAR) calculated at symmetric dates surrounding the event date The findings are detailed in Table 5.14.
Table 5.14: T-test results for CAAR pairs of symmetrical dates around event dates for unqualified opinion with emphasis paragraph
The analysis of the results indicates that there are negative effects associated with the unqualified opinion featuring an emphasis paragraph, particularly during the periods T(-4)-T(+4), T(-1)-T(+1), and T(-1)-T(+0) However, the p-values for these periods—0.256, 0.382, and 0.382—are all greater than 0.05, suggesting a lack of significant impact Furthermore, the p-values for the remaining periods also exceed 0.05, indicating that the unqualified audit report with an emphasis paragraph does not significantly affect share prices and returns throughout the entire test period.
The study analyzes two types of audit opinions and their impact on stock market reactions, utilizing descriptive statistics and OLS regression to assess the relationship between expected and market returns The findings indicate that both qualified and unqualified audit opinions did not significantly influence stock prices, as evidenced by a p-value greater than 0.05, leading to the rejection of hypotheses H1 and H2 Consequently, there was no notable change in stock prices within the five-day event window surrounding the publication of the audit report.
CONCLUSION AND RECOMMENDATIONS
C ONCLUSION
This study investigates the significance of audit reports in conveying crucial information to financial statement users, focusing on how qualified and unqualified audit opinions, particularly those highlighting uncertainties regarding ongoing operations or financial crises, influence the stock prices of companies listed on the Ho Chi Minh Stock Exchange.
To achieve the research objective, the author employs an event research method utilizing a market-based research model over a four-year period from 2018 to 2021 This approach involves analyzing the fluctuations in market share prices and abnormal returns of publicly listed companies within a seven-day event window surrounding the release of audit reports on the HOSE, with a total estimation window of 100 days The study focuses on a sample of 96 audit reports from listed companies in Vietnam.
The study effectively addresses the research question regarding the impact of two types of audit opinions—qualified and unqualified with emphasis—on stock market prices The findings indicate that the Average Abnormal Returns (AAR) exhibit a more negative than positive reaction across various days within the event window, suggesting a negative stock price response to both audit opinions However, since all p-values exceed 0.05, hypotheses H1 and H2 are rejected, indicating that neither the qualified nor unqualified audit opinions significantly influence stock market prices.
The calculation of Cumulative Abnormal Returns (CAAR) indicates that the stock market reacts negatively to both types of audit opinions, with values consistently below zero and p-values exceeding 0.05, suggesting an insignificant impact on stock prices Further testing of CAAR over a shorter timeframe reveals similar results, where some periods show negative values, yet most remain statistically insignificant Therefore, it can be concluded that audit reports do not have a significant effect on share prices and returns throughout the majority of the testing period.
Audit opinions often lack informativeness for investors and fail to aid in decision-making, potentially due to a misunderstanding of their significance This study highlights the impact of audit opinions on stock price volatility in developing markets, particularly in Vietnam To enhance the relevance of audit opinions for investors, the author suggests implementing specific recommendations.
R ECOMMENDATIONS
Delays in releasing financial statements post-audit hinder investors' access to timely information regarding the auditor's opinion, which is crucial for informed decision-making (Dibia, N O., & Onwuchekwa, J C., 2013) Consequently, investors are compelled to rely on alternative information sources or analytical tools This situation highlights that audit reports—whether they contain qualified or unqualified opinions with emphasis paragraphs—fail to serve as timely resources for investors in Vietnam.
Despite Stock Exchange regulations mandating timely disclosure of audited financial statements, delays in information release persist This study reveals that 38.5% of companies, or 37 out of 96, fail to comply with these disclosure requirements The Stock Exchange's website indicates ongoing reminders issued to businesses that violate these regulations Research indicates that the type of financial statements and the nature of audit opinions significantly influence the timeliness of disclosures, with negative audit opinions leading to longer delays in issuing financial statements (Yuyanti, R., & Mulya, H., 2020) To enhance market efficiency, the author proposes several solutions for listed companies.
To enhance the professional skills and ethical standards of accounting personnel within the organization, it is essential to ensure timely preparation of financial statements that comply with legal requirements This practice not only guarantees the accuracy of financial reports but also facilitates the audit process conducted by independent auditors.
To ensure the integrity and timeliness of audited financial statements, it is crucial to proactively select a reputable auditing firm with a large, professional staff This choice enhances the assurance that the financial reports presented to the public are prepared honestly and in compliance with legal standards.
To address the slow release of audited financial statements to the public, it is essential to identify the underlying causes and responsible parties Taking immediate corrective action will help minimize the risk of recurrence in the future.
Finally, listed companies must be properly aware of the positive effects of timely and honest disclosure of information on the company's operations
6.2.2 Recommendations to policy-making agencies
Policymakers exert significant control over the stock market, particularly regarding the timing of audit report publications To enhance market transparency, it is crucial for regulators to bolster the management of information disclosure by listed companies Additionally, implementing stricter sanctions for non-compliance is essential to ensure that enterprises adhere to regulations effectively.
L IMITATIONS OF THE STUDY
The study has provided empirical evidence about the audit report's value for Vietnamese stock market users However, the study still has many limitations, as follows:
The research sample for this thesis is limited, focusing exclusively on companies listed on the Ho Chi Minh Stock Exchange over a four-year period, resulting in a small number of observations that fulfill the study's requirements.
The author employed a market-based research method to analyze the impact of audit opinions on stock price volatility over a four-year period, utilizing the event window approach to minimize the influence of simultaneous factors However, the study acknowledged the potential for other events to occur within the event window, which could affect the results While the event window method offers advantages such as simplicity and ease of interpretation, it also has limitations, as it primarily captures short-term effects on stock prices without accounting for other influencing factors, potentially leading to abnormal returns that may not be directly attributable to the events being studied.
F UTURE RESEARCH DIRECTIONS
In order to overcome the limitations presented in the above section, the study proposes a number of directions for future research as follows:
Firstly, increase the sample size included in the study by extending the research period and implementing it on both stock exchanges in Vietnam, HOSE and HNX
Second, consider further possible effects on stock prices during the study period so that confounding observations can be removed
In this chapter, the author presents several recommendations aimed at listed companies, audit firms, investors, and regulatory agencies to enhance the timeliness of audit reports, thereby boosting public confidence in auditor opinions and increasing investor awareness of the audit report's significance Additionally, the thesis addresses the limitations of the current study and proposes directions for future research.
Bài viết của Ánh Tuyết (2022) cảnh báo về tình trạng các công ty kiểm toán không tuân thủ đầy đủ các quy định pháp luật Điều này gây ra lo ngại về tính minh bạch và độ tin cậy trong ngành kiểm toán Để biết thêm chi tiết, bạn có thể truy cập vào bài viết gốc.
Bạch Đức Hiển (2008) Giáo Trình Thị Trường Chứng Khoán NXB Tài Chính
Bộ Tài Chính đã ban hành Chuẩn mực kiểm toán số 200 vào năm 2012, quy định mục tiêu tổng thể của kiểm toán viên và doanh nghiệp kiểm toán trong việc thực hiện kiểm toán theo chuẩn mực kiểm toán Việt Nam Thông tư số 214/2012/TT-BTC kèm theo văn bản này cung cấp hướng dẫn chi tiết về các yêu cầu và tiêu chí cần thiết trong quá trình kiểm toán.
Bộ Tài Chính (2012) VSA 700 - Hình thành ý kiến kiểm toán và báo cáo kiểm toán về báo cáo tài chính
Bộ Tài Chính (2012) VSA 705 - Ý kiến kiểm toán không phải là ý kiến chấp nhận toàn phần
Bộ Tài Chính (2012) VSA 706 - Đoạn "Vấn đề cần nhấn mạnh" và "Vấn đề khác" trong báo cáo kiểm toán về báo cáo tài chính
Bộ Tài Chính (2012) Thông tư số 155/2015/TT-BTC thay thế thông tư 52 hướng dẫn về việc công bố thông tin trên thị trường chứng khoán Ban hành ngày
Bùi Thị Năm (2017) đã thực hiện nghiên cứu về tác động của ý kiến kiểm toán đối với sự biến động giá cổ phiếu, cung cấp bằng chứng thực nghiệm từ các công ty niêm yết tại Sở Giao dịch chứng khoán Tp.HCM Nghiên cứu này được đăng tải trên Tạp chí Tài Chính năm 2017, góp phần làm rõ mối liên hệ giữa chất lượng kiểm toán và hành vi thị trường chứng khoán.
Bùi Thị Năm, Nguyễn Thị Kim Anh (2021) Phương pháp sự kiện trong nghiên cứu sự kiện TNU Journal of Science and Technology, 226(08), 149-156
Lê Thị Mai Anh (2018) đã nghiên cứu ảnh hưởng của báo cáo kiểm toán đến thị giá cổ phiếu thông qua một nghiên cứu thực nghiệm tại các doanh nghiệp niêm yết trên sàn chứng khoán Hồ Chí Minh Nghiên cứu này được công bố trên Tạp chí Tài Chính 2018 và cung cấp cái nhìn sâu sắc về mối quan hệ giữa chất lượng báo cáo kiểm toán và sự biến động của giá cổ phiếu trên thị trường.
Nghiên cứu của Nguyễn Thị Hoa Hồng, Nguyễn Tiến Đạt và Nguyễn Đắc Đạt (2020) phân tích ảnh hưởng của chất lượng kiểm toán đến giá cổ phiếu của các doanh nghiệp niêm yết trên thị trường chứng khoán Việt Nam Kết quả cho thấy chất lượng kiểm toán có mối liên hệ tích cực với giá cổ phiếu, khẳng định vai trò quan trọng của kiểm toán trong việc nâng cao niềm tin của nhà đầu tư và ổn định thị trường tài chính Nghiên cứu được đăng trên Tạp chí Khoa học & Đào tạo Ngân hàng, trang 59-84.
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Appendix 1: Number of new individual investor accounts by year from
Source: The Vietnam Securities Depository
Appendix 2: The list of research samples
1 AGM An Giang Import - Export Company
2 BWE Binh Duong Water Environment JSC
4 CCI Cu Chi Commercial & Industrial Developing Investment JSC
5 CIG COMA 18 Joint Stock Company
7 CTI Cuong Thuan IDICO Development Investment Coporation
Number of new individual investor accounts by year (2016 - 2021)
9 DAH Dong A Hotel Group JSC
10 DCM Petro Viet Nam Ca Mau Fertilizer JSC
11 DHM Duong Hieu Trading and Mining Development JSC
12 DLG Duc Long Gia Lai Group JSC
13 DQC Dien Quang Joint Stock Company
14 DXV Da Nang Construction Building Materials & Cement JSC
15 FCM Fecon Mining Joint Stock Company
16 GIL Binh Thanh Import - Export Production & Trade JSC
17 HAG Hoang Anh Gia Lai Joint Stock Company
18 HAS Hacisco Joint Stock Company
19 HOT Hoi An Torurist Service Joint Stock Company
20 HQC Hoang Quan Consulting-Trading-Service Real Estate Corporation
21 HNG Hoang Anh Gia Lai Agricultural JSC
22 HU1 HUD1 Investment and Construction JSC
23 HU3 HUD3 Investment and Construction Joint Stock Company
25 ITA Tan Tao Investment and Industry Corporation
27 KOS KOSY Joint Stock Company
28 LCG Lizen Joint Stock Company
29 LEC Central Power Real Estate Joint Stock Company
30 LGC CII Bridges & Roads Investment JSC
31 LGL Long Giang Investment & Urban Development JSC
32 MCG MCG Energy and Real Estate JSC
33 NAV Nam Viet Joint Stock Company
34 NNC Nui Nho Stone JSC
35 OGC Ocean Group Joint Stock Company
36 PGV Power Generation Joint Stock Corporation 3
Pha Le Plastics Manufacturing and Technology Joint Stock Company
38 PLX Viet Nam National Petroleum Group
41 PTB Phu Tai Joint Stock Company
42 PTC Icapital Investment Joint Stock Company
43 PTL Victory Capital Joint Stock Company
44 PVD PetroVietnam Drilling & Well Services Corporation
45 QBS Quang Binh Import & Export JSC
46 QCG Quoc Cuong Gia Lai Joint Stock Company
47 SCD Chuong Duong Beverages Joint Stock Company
48 SII Sai Gon Water Infrastructure Corporation
49 SJD Candon HydroPower Joint Stock Company
50 TDH Thu Duc Housing Development Corporation
51 TEG Truong Thanh Energy and Real Estate JSC
53 TNI Thanh Nam Group JSC
55 TSC Techno - Agricultural Supplying Joint Stock Company
56 TTF Truong Thanh Furniture Corporation
57 VAF Van Dien Fused Magnesium Phosphate Fertilizer JSC
58 VFG Viet Nam Fumigation Joint Stock Company
60 VNE Vietnam Electricity Construction Joint Stock Corporation
61 VNL Vinalink Logistics Joint Stock Company
62 VPG Viet Phat Import Export Trading Investment JSC