Global Journal of Management and Business Research, D: Accounting and Auditing, Volume 22 Issue 2

carried out on the price share behavior around the dates on which the auditor’s issue reservations on certain accounting items likely to affect the financial statements and last section significantly will summarize the main results and conclude. II. O verview of P revious R esearch a) Some preliminary observations One of the pioneering studies, from the point of view of the methodology used, and the size of the sample of audit reservations, is that of [14], who highlighted three series of methodological difficulties faced by event tests in general and in particular those concerning the effect of the auditor's stock price reservations. The authors show that, on the whole, the informative content of the auditor's report for the American market seems relatively weak, and, limited to the most serious cases of reservations. In another study, [15] concluded that press announcements of audit reserves “subject to” are rare, but if they occur, they induce adverse heritage effects on the stock price concerned. The study done by [17] leads to the same result. However, these results contrast with several other studies, which did not detect this adverse price reaction. [14] (DDHL hereafter) studied the behavior of stock prices around the dates on which auditors’ express reservations relating to uncertainty on certain accounting items, significant delays likely to materially affect the financial statements (“Subject to” qualified audit opinion). The sign and the significance of the abnormal returns of the shares of the companies for which the auditor could not express an opinion, for lack of having the necessary means for his audit work (“disclaimers of audit opinion”) are also examined. The authors consider all of these methodological, conceptual, and procedural problems by developing an original methodology. Indeed, unlike previous studies, DDHL took care to identify the announcement date with great precision. Their sample is large enough to allow them to analyze the effects on prices of several types of reservations issued by the auditor. The tests on the behavior of cost and the underlying informative content of the reservations issued by the auditor come up against three significant problems: the definition of the date of public announcement, the anticipations, and the previous revelations, and finally, the concomitant revelations. Regarding the first obstacle, the problem of identifying the announcement date arises in the majority of event studies. The difficulty here stems from the fact that, the first public announcement of a qualified opinion auditor's reservation may occur when the annual accounting result is publicly announced for the first time, when the annual report is available to the public, when the 10 -K is revealed to the public or else when the company publishes an announcement in the press stating the auditor's reservations and often the difficulties encountered by the company. Studies that assume that the public announcement of a formulated reservation by the auditor is linked to a fixed date (for example the first announcement of accounting profit in the Wall Street Journal) therefore, have aminimal scope. Research undertaken by the authors reveals that it is difficult, if not impossible, to specify a single event date that represents the date of the public announcement of reserve notices for all companies. Regarding the second hurdle, a qualified audit opinion is informative only to the extent that it reveals information not embodied in the lectures. Some reservations have been anticipated by the market following previous details. Thus, a reservation opinion which a priori is not good news for the company, can represent positive (negative) information for the market if the latter had expected a more (less) severe judgment from the auditor. The authors did not content themselves with observing the sign and the significance of average abnormal returns. They were able to control the problems related to expectations by constructing initial tests based on the technique of squared standardized forecast errors, developed by [6] and [35]. The problem of concurrent information is also difficult to solve. To reduce the impact, the authors examined abnormal returns over short intervals (3 to 5 days), ensuring that the publication of the accounting results is earlier. b) Process for changing audit reports in France For a very long time in France, audit reports have suffered from a negative image among readers who say they do not use them as a privileged source of information. These reports are often assimilated by their readers into a component of financial statements devoid of any actual informational content [38]. The evolution of the current French audit report to its present form has gone through several stages. First, the reform initiated by the CNCC 1 The second phase of the process of evolution of the French audit report corresponds to the introduction by the CNCC, in 2003, of two standards, in 1995 is analysed by [23], who identifies five innovations, based on criticisms formulated by users of the audit report. These innovations concern the respective responsibilities of managers and statutory auditors, the nature of the assurance provided by the audit opinion, the scope of the tests carried out within the framework of the audit mission, more particularly, the appeal, the sampling approach, the nature of the reservations expressed by the auditor in his general report and the addition of a certain number of additional observations to the new audit report [18]. 1 National Company of Statutory Auditors. 2 Global Journal of Management and Business Research Volume XXII Issue II Version I Year 2022 ( )D © 2022 Global Journals Informational Performance of Audit Reports Content: Case of French Companies Listed on the Stock Exchange during the Decade 2010-2020