The Value of Asking Tough Questions: How Auditor Skepticism Improves Reporting

Summary

This study examines whether an audit partner’s trait skepticism, or their natural tendency to question evidence and delay conclusions, affects a key audit decision: issuing a going-concern (GC) opinion for financially distressed companies. A GC opinion signals that a company may struggle to continue operating and is critical for investors and creditors. The authors combine survey-based psychological data with real audit outcomes from Belgium. The final sample includes 19,200 financially distressed company-year observations linked to 136 audit partners from 2008–2017, providing strong real-world evidence on how individual auditors influence reporting decisions.