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

Informational Performance of Audit Reports Content: Case of French Companies Listed on the Stock Exchange during the Decade 2010-2020 13 Global Journal of Management and Business Research Volume XXII Issue II Version I Year 2022 ( )D © 2022 Global Journals As shown in Table 7, the reversal of reserves and the refusal to certify the previous year have a negative and very significant impact on the prices of the securities of the companies in the sample. The average abnormal returns are very substantial over the interval - 1, +1, (-0.87% with a t student of 3.01 and -0.65% with a t student of 2.27, respectively). Note: according to the data in Table 7. The points joined by a solid line represent the cumulative average abnormal returns ( ) . Graph 5: Announcement of reservations and refusal to certify issued for the second time It means that users of the auditors' reports examine with greater attention the impact of the reservations made on the annual and consolidated accounts for the previous financial year. It is observed that these results are more significant than those of the reservation formulated for the first time. In addition, even if the nature of the reservations is often identical, the impact of these reservations is considered by investors as bad news, mainly when information concerning these reservations in the first year is available. However, when reservations expressed for the third time (25 reservations) by the auditors on the annual or consolidated financial statements are used, the results (average abnormal returns) are not significant. However, there are always negative returns around the event date. d) The informative content of the various reasons for reservations mentioned in the annual and consolidated reports As shown in Table 2, 304 reservations and refusals to certify are broken down by reason into ten different classes. For the following six types of reservations observed in the annual or consolidated reports of the companies in the sample, event tests are carried out: uncertainty, limitation of work, accounting principles, non-recognition of operations and provisions, pension commitments, and leave, non-compliance with international regulations. In this work, the results concerning three types of reservations are presented: “uncertainty,” “limitation of work,” and “disagreement on accounting rules and principles.” 14 i. The informative content of the “uncertainty” reservations In certain circumstances, the company's managers do not have sufficient information to translate a situation according to which a concrete decision can be made. For example, when t he auditor prepares his report, there are risks relating to certain transactions which cannot be provisioned, or the amount of which can only be provided to a reasonable approximation because their amount is uncertain or not known, or the probability of occurrence is doubtful. Whether the risk is provisioned or not, the auditor could not obtain sufficient evidence to justify the amount provided or the absence of provision. In addition, going concern risk may be a particular case of uncertainty. In the present study, among the 304 reserves that are the subject of event tests, 88 are for reasons of uncertainty. Table 8 shows the results for event tests performed on the uncertainty reserves, choosing the third event date (the average between the first two dates). 14 For other types of reserves, see Soltani [1993] -4 -3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 -6 -4 -2 0 2 4 6 Cumulative excess