Impact of Audit Opinions on Stock Returns in Istanbul Stock Exchange (ISE)

Hakan Aygoren and Suleyman Uyar

Istanbul Stock Exchange Review, 2007, vol. 9, issue 36, 27-48

Abstract: The purpose of this study is to analyze the impact of audit opinions on stock returns in the Istanbul Stock Exchange (ISE). In this sense, abnormal returns are calculated in order to see the reaction of the market to audit opinions around the issuance date. Data used in the study were obtained from the audit reports of 2004 and 2005 for randomly selected 101 companies traded in the ISE. We have used the event study methodology in our work, and maintain that the capital market is efficient at the intermediate level. Based on the empirical findings, investors obtained abnormal or excess returns over the event window. It is also concluded that unqualified and qualified audit opinions do provide different information to investors. It should be also indicated that the perception of investors to audit reports in different time periods are dissimilar. Overall, from the findings it can be concluded that the ISE cannot be classified as a semi-strong form efficientmarket.

Date: 2007
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