Research from Texas A&M University-Corpus Christi Provides New Study Findings on Risk Management (Going Concern Risk and Bankruptcy Outcomes Associated with Property, Plant, and Equipment Intensity, Impairment, and Age): Insurance – Risk Management

NewsRx Policy and Law Daily

2026 APR 13 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Investigators publish new report on risk management. According to news reporting out of Corpus Christi, Texas, by NewsRx editors, research stated, “Corporate management and their auditors are required to evaluate whether there is a risk that the company’s ability to continue as a going concern is impaired.”

The news correspondents obtained a quote from the research from Texas A&M University-Corpus Christi: “For fixed asset-intensive firms, however, regulatory inspections consistently identify problems with auditors’ testing of property, plant, and equipment (PPE), raising doubts about whether auditors understand the risks associated with these assets. This paper examines whether auditors incorporate the risks associated with PPE into their going concern evaluation and the accuracy of that evaluation. Using probit regression on financial and auditing data of U.S. public firms contained in S&P Global Compustat North America, Audit Analytics, and the Center for Research in Security Prices (CRSP) from 2000 to 2019, this paper examines the effects of PPE intensity, impairment, and age on the likelihood that an auditor issues a going concern modification. We test the accuracy of the auditor’s going concern evaluation by comparing it to the client’s subsequent viability or bankruptcy. Our results find that PPE intensity and PPE impairments are positively associated with the likelihood of an auditor issuing a going concern modification, indicating that auditors view PPE as contributing to substantial doubt about the entity’s ability to continue as a going concern. We do not find a significant association between PPE age and going concern modification.”

According to the news reporters, the research concluded: “Additionally, the going concern evaluation is more accurate for firms with higher PPE intensity. These findings imply that auditors appropriately consider PPE assets in their going concern evaluations.”

For more information on this research see: Going Concern Risk and Bankruptcy Outcomes Associated with Property, Plant, and Equipment Intensity, Impairment, and Age. Risks, 2026,14(3):45. (Risks - http://www.mdpi.com/journal/risks). The publisher for Risks is MDPI AG.

A free version of this journal article is available at https://doi.org/10.3390/risks14030045.

Our news editors report that more information may be obtained by contacting Donald Ray Deis, Department of Accounting, Finance & Business Law, Texas A&M University-Corpus Christi, Corpus Christi, TX 78412, United States. Additional authors for this research include J. Kenneth Reynolds, Christopher Wertheim, Tian Xu, Daqun Zhang.