The paper applies a compound option-based structural credit risk model to estimate the short-run and forward default probability for a sample of listing companies from Taiwan. We contribute to the literature by linking the relationship between the corporate social responsibility (CSR) rating and the firm's default risk. Our empirical results show that good CSR companies have very low short-term default probability and forward default probability. In terms of regression analyses, we find that there is a negative and significant association between CSR score and forward default probability.

Purpose – This paper aims to examine the effect that the recent financial crisis had on auditor conservatism in the form of increased going-concern opinions. Design/methodology/approach – This study uses a sample of US’ distressed firms from 2005 to 2011 to test the change in going-concern opinions issued. This paper uses a logistic regression model to control for other predictors of going-concern opinions to determine when the financial crisis led to an increase in auditor conservatism. Findings – The authors find that auditors became more conservative in the form of issuing higher levels of going-concern opinions even after controlling for other predictors of going-concern opinions. This increased conservatism was present in both Big 4 and non-Big 4 accounting firms. The increased conservatism quickly returned to normal levels when the financial crisis eased. Originality/value – These findings add to the literature on the effects of environmental changes on audit opinions. Additionally, this study finds a difference in the timing of the reaction by large and small accounting firms, but, overall, it finds consistency in that both increased conservatism during the crisis and quickly returned to normal afterward.

This study investigates whether the appointment of a female to the audit committee of a foreign issuer in the US is positively associated with subsequent market price reaction. We hypothesize that female members on the audit committee can strengthen corporate governance by their conservative and ethical qualities. Accordingly, such appointments deliver a positive message to capital market participants. In order to observe the impact of audit committee gender diversity on foreign firms, we include all audit committee appointments of US-traded foreign firms from 2002 to 2009. We find that the appointment of female audit committee members has significant positive cumulative abnormal returns compared to the appointment of male audit committee members.

Prior studies show a mixed relation between corporate social responsibility (CSR) and corporate financial performance (CFP). This paper attempts to address the issue using listed companies from Taiwan during the period from 2007 to 2010. Unlike prior studies that use qualitative approaches to construct a CSR index, this study examines the relation between CSR and CFP by directly adopting the CSR score from the CSRHub database of companies' social, environmental, and governance performance which measures these factors using a scale from zero to 100 points. We find that (1) there is a positive and significant interaction between CSR and CFP, (2) high score CSR firms tend to outperform low score CSR firms and (3) the governance dimension of CSR has a more significant and positive association with stock price returns than other dimensions (community, employees, and environment) of CSR. Our results, therefore, provide additional information regarding the relation between CSR and CFP within the context of emerging markets.

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