Audit Partner Trait Skepticism and Going-Concern Reporting Decisions

We investigate the relationship between audit partners' trait skepticism and their skeptical actions in the form of going-concern (GC) reporting decisions for financially distressed client companies. We use a unique research design whereby we link a psychometric measurement of partner trait skepticism with publicly available data on companies' characteristics and audit opinions. Our main results reveal a positive association between partners' trait skepticism and their skeptical actions (the likelihood they issue GC opinions to financially distressed clients). In supplemental analyses, we investigate nuances of this association with respect to both partner competence and independence. We find that partners' competence and independence moderate the relationship between trait skepticism and skeptical actions, in that competence and independence help auditors to act on their skeptical disposition.