THE STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING HO CHI MINH UNIVERSITY OF BANKING TA THI THU UYEN THE INFLUENCE OF AUDIT OPINIONS ON STOCK MARKET PRICES - EMPIRICAL RESEARCH IN COMPANIES LISTED ON THE HO CHI MINH STOCK EXCHANGE GRADUATION THESIS MAJOR: ACCOUNTING AND AUDITING CODE: 7340301 SUPERVISOR: DR. HUYNH THI NGOC ANH HO CHI MINH CITY – 2022 THE STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING HO CHI MINH UNIVERSITY OF BANKING TA THI THU UYEN STUDENT CODE: 050606180440 HQ6-GE01 THE INFLUENCE OF AUDIT OPINIONS ON STOCK MARKET PRICES - EMPIRICAL RESEARCH IN COMPANIES LISTED ON THE HO CHI MINH STOCK EXCHANGE GRADUATION THESIS MAJOR: ACCOUNTING AND AUDITING CODE: 7340301 SUPERVISOR: DR. HUYNH THI NGOC ANH HO CHI MINH CITY – 2022 ABSTRACT Financial Statements are an essential information channel for investors to help them analyze, evaluate, and make investment decisions. However, there is a gap between the expectations of business managers and users of financial statements about the truthfulness and reliability of financial statements.
Therefore, information asymmetry determines investors to call for auditors' services. Through the audit reports, the auditors offer a professional, objective, and independent opinion regarding the presentation in financial statements of the true and fair view of the most significant aspects of the financial position and performance, in accordance with the accounting framework. This study investigates the effect of the audit reports containing qualifications or an emphasis on matter paragraph related to going concern uncertainty or financial distress on stock market prices in the Ho Chi Minh Stock market. In particular, abnormal returns are analyzed around the publication date of this audit report.
The event study methodology, focusing on a short event window, was used to determine whether there was an immediate market reaction to the audit report announcement. A market-based study was conducted on the qualified and unqualified opinions, emphasising paraphrasing the shareholding companies listed on the Ho Chi Minh Stock market during 2018 - 2021. The study's conclusions showed that two types of opinions negatively affect stock prices in short periods, but this effect is not significant. In other words, there is no information content in qualified and unqualified with an emphasis on matter paragraph in the HoChiMinh stock exchange.
DECLARATION OF AUTHENTICITY I declare that this is my independent thesis. The data used in the thesis are of clear origin and published following the law. The research results in the thesis are my research and analysis, honestly, objectively, and by following the reality of Vietnam. These results have not been published in any previous papers.
Ho Chi Minh City, November 2022 The Author Ta Thi Thu Uyen ACKNOWLEDGEMENT Firstly, I would like to send my profound gratitude to all the lecturers at Banking university, in the Office of Academic Affairs, and especially to the Accounting and Auditing Department lectures while studying for a bachelor's degree at the Ho Chi Minh University of Banking Secondly, I would like to express my sincerest and most profound thankfulness to Dr. Huynh Thi Ngoc Anh for her guidance and patience in giving me valuable recommendations during my study period. I am happy and fortunate to carry out this study under her supervisor. Lastly, I would like to thank my family for their support during my study and life.
Without encouragement and sacrifice, I would not have finished this thesis, so I express my special love and gratitude to them. In the implementation process, mistakes are inevitable despite consulting, exchanging, and absorbing suggestions from teachers and friends. With the effort to improve more and more, I look forward to receiving valuable advice from teachers and friends. Warmest regards Ta Thi Thu Uyen TABLE OF CONTENTS ABSTRACT.
DECLARATION OF AUTHENTICITY. TABLE OF CONTENTS. LIST OF ABBREVIATIONS. LIST OF FIGURES.
LIST OF TABLES .1 THE NECESSITY OF THE REPORT .2 THE AIM OF THE THESIS .3 THE RESEARCH QUESTIONS .4 OBJECT AND SCOPE OF THE RESEARCH .6 CONTRIBUTION OF THE THESIS.7 THE PROPOSED LAYOUT OF THE THESIS. 4 CHAPTER 2: OVERVIEW OF THE RESEARCH FIELDS. 12 CHAPTER 3: CONCEPTUAL FRAMEWORK .1 THE THEORETICAL BASIS FOR AUDITING FINANCIAL STATEMENTS AND AUDIT OPINIONS .1 The concept and purpose of auditing financial statements .2 The types of audit opinions of financial statements .2 OVERVIEW OF THE SECURITIES MARKET.1 The conception of the Securities market .2 Asymmetric Information Theory.4 THEORY OF EVENT STUDY METHODOLOGY .1 THE METHODOLOGY AND RESEARCH IMPLEMENTATION PROCESS .2 Research implementation process .2 DATA ANALYSIS METHODS .1 Research hypothesis, sample selection, and research data collection. 33 CHAPTER 5: RESEARCH RESULTS.1 DATA ANALYSIS AND RESEARCH FINDINGS .2 RELATIONSHIP BETWEEN TYPES OF AUDIT OPINION AND STOCK PRICE .1 Effect of the qualified audit opinion on stock prices .2 The effect of the unqualified audit opinion with the emphasis paragraph on the share price.
50 CHAPTER 6: CONCLUSION AND RECOMMENDATIONS.1 Recommendations for listed companies .2 Recommendations to policy-making agencies .3 LIMITATIONS OF THE STUDY .4 FUTURE RESEARCH DIRECTIONS. 60 APPENDIX 1: NUMBER OF NEW INDIVIDUAL INVESTOR ACCOUNTS BY YEAR FROM 2016 TO 2021. 60 APPENDIX 2: THE LIST OF RESEARCH SAMPLES. 60 LIST OF ABBREVIATIONS FS Financial Statement ISA International Auditing Standards HNX Hanoi Stock Exchange HOSE Ho Chi Minh Stock Exchange SEC Securities And Exchange Commission VSA Vietnamese Standard Auditing VSD Vietnam Securities Depository LIST OF FIGURES Figure 4.1: Event timeline of the study.
32 LIST OF TABLES Table 5.2: Summary of events and event dates during the study period .3: Summarize the alpha, and beta coefficients of each stock in the research period .4: The results of calculating average abnormal return .5: The average abnormal return summary table in the event window for the qualified audit opinion .6: T-test results for average abnormal return day by day in the event window for the qualified opinion .7: CAAR in the event window for the qualified opinion .8: T-test results for CAAR of all companies in the total event window for qualified opinion .9: T-test results for CAAR pairs of symmetric dates around event dates for qualified opinions .10: Average abnormal return summary table in event window for unqualified opinion with emphasis paragraph .11: T-test results for average abnormal return day by day in the event window for the unqualified opinion .12: CAAR in the event window for unqualified audit opinions with emphasis paragraph .13: T-test results for CAAR of all companies in the total event window for unqualified audit opinions with emphasis paragraph .14: T-test results for CAAR pairs of symmetrical dates around event dates for unqualified opinion with emphasis paragraph .1 The necessity of the report Financial statements are an essential product of every business, reflecting financial information, financial position, and business performance. Financial Statements are an important information channel to help investors analyze, evaluate, and make investment decisions. Yu (2013) identified five groups of users of the information from financial statements, including investors, governments, employees, customers, and the public. However, there is a gap between the expectations of business managers and users of financial statements about the truthfulness and reliability of financial statements.
To gap was bridged, an independent audit was established to assure external users of the reliability of the information presented in the financial statements. Currently, independent audit activities play an essential role in the market economy. Independent audit activities, including audits of financial statements, are considered a tool to provide necessary, objective, honest, and valuable information for the decision-making of information users. Financial reporting information, especially the audit opinion in independent audit activities, helps protect the economy's sustainability and stability.
Therefore, the audit opinion can be understood as the independent Auditor's statement in the audit report about the client's financial position through the Auditor's results. The groups using information from the audit report will base on the Auditor's audit opinion in making decisions. Thus, the audit opinion issued by the Auditor in the audit report indicates whether the organization follows accounting standards and is interested in financial management. Still, it is also an essential factor in preventing fraudulent activities.
The stock market is an integral part of the capital market, an investment channel that attracts many individuals and organizations to participate. Auditing financial statements with companies listed on the stock exchange are mandatory in most 2 countries worldwide, including Vietnam. Therefore, financial statements influence investors' decisions in the stock market and affect the stock market price. In the results, the author chose the topic: "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.2 The aim of the thesis 1.1 Overall objectives The study's overall objective is to identify the influence of the type of audit opinion on stock price changes.2 Detail objectives Provide empirical evidence and the impact of specific audit opinions, including the unqualified opinions with the emphasis and "other matters" paragraphs and the qualified opinions on stock prices and reactions to economic making-decision investors in Vietnam.3 The 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? 1.4 Object and scope of the research The object of the study is the audit opinion on the audit reports of companies listed on the Ho Chi Minh Stock Exchange (HOSE) and the stock price volatility of these companies.
3 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.5 Methodology 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. Analytical and synthesis methods: The Conceptual framework of research issues and related studies is a basis for proposing audit opinions that may influence investors' decision-making. Quantitative method: The data for research is mainly primary, collected by collecting audit opinions and the publication date of audit reports of non-financial companies listed on the Ho Chi Minh Stock Exchange.
Stock market prices are VN-Index within the period 107 days before the date of publication, the date of publication and seven days after the publication of the audit report. This data will be processed manually with the assistance of an Excel spreadsheet. 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.6 Contribution of the thesis Theoretically: The study contributes to helping readers have an overview of the influence of the audit opinion on the stock market price or the market's reaction to the audit opinion.
On the practical side: Provide empirical evidence on the influence of audit opinions on investors' decisions through analysis of stock price volatility. The research results help users of the financial statements to perceive the value of the audit report as 4 a valuable source of information in their decision-making process, as well as help them obtain reliable information on market reaction based on the information contained in the audit report.7 The proposed layout of the thesis Chapter 1: Introduction This chapter introduces the reason for choosing the topic and the necessity of the research based on practice and empirical evidence to determine the research objectives and thesis topic. In addition, define the research object and scope, clearly presenting the thesis's scientific and practical contributions. Chapter 2: Overview of the research fields Chapter 2 will introduce previous studies, including those on the world and research in Vietnam related to the impact of audit opinions on stock prices at stock exchanges.
From there, comment on previous studies and identify research gaps. Chapter 3: Conceptual framework This chapter will introduce the basics of audited financial statements and types of audit opinions—besides an overview of the stock and stock markets.