Statement on Auditing Standards No. 58 (AICPA 1988) effectively eliminated the "subject-to" audit opinion which auditors used to highlight financial statement uncertainties. Elimination of the "subject-to" report implied the Auditing Standards Board's belief that the opinion conveyed no material information to users. Several market-based studies of the value of "subject-to" opinions have yielded mixed results. A major limitation in most of these studies was a lack of precision in identifying the exact date upon which information, if any, was revealed to the market.

This study extends the previous work by examining the common share price reactions to public announcements of withdrawn "subject-to" opinions. The sample consists of 52 withdrawn opinions announced betweeen 1978 and 1987. Each announcement had to be free of potentially contaminating information that might have affected common stock prices. Also, adequate common stock price data had to be readily available for all firms. To measure the impact of the announcement, a method was employed by which expected returns (calculated for a period prior to the time closely surrounding the announcement) were compared to the returns during the announcement period. Results indicate an increase in returns attributable to the announcement.