Going-Concern Filings Excluding Accounting-Standard Notes, Trailing 12 Months (10-K and 10-Q, SEC)

## What this measures

The total over the latest 12 months of original Form 10-K annual reports and Form 10-Q quarterly reports with a document (the report itself or an exhibit such as the auditor's consent) containing both phrases "substantial doubt" and "going concern", from every company that files with the SEC. Counted by filing date from April 2009, each filing once. Documents that also contain "2014-15" are left out (the search query adds -"2014-15"). When ASU 2014-15 was issued in August 2014, notes on recent accounting pronouncements put both phrases into thousands of reports from companies with no doubt about their future; this version removes them, and with them the reports of companies in real doubt that also cite the standard. From 2018 on it leaves out between 7% and 20% of the filings the full query matches each year, so it understates the level; use it for the shape of 2014–2017.

## Why it matters

When an auditor or management concludes there is substantial doubt that a company can continue as a going concern for the next year, it is saying the company may not be able to pay its debts as they come due without new money. The count of reports carrying that language is a broad read on financial distress among smaller public companies, which dominate it, and moves with funding conditions for them.

## How to read it

Higher means more reports carry going-concern language. The monthly count is strongly seasonal (annual reports cluster in March and April, quarterly reports in May, August and November), so the 12-month total is the series to compare across years. The count also moves with the number of small companies that report to the SEC, which changes over time.

## What it does not say

It counts filings that contain the phrases, not filings with a going-concern opinion: a filing that says there is no substantial doubt, that the doubt has been alleviated, or that a future event could raise substantial doubt still matches. Read by hand, 24 of 30 matching filings drawn at random from every filer stated that substantial doubt exists (an auditor's going-concern paragraph or management's own conclusion); the rest used the phrases in a negation, an accounting-policy note or a hypothetical. Palanor's rules, applied to 15 filings drawn at random from each year, judged 203 of 270 to state that doubt exists; policy notes on the 2014 accounting standard for going-concern evaluation (ASU 2014-15) make up part of the rest from 2014 to 2018, so those years overstate distress more than others (credit.going_concern.filings.ex_asu_note_12m leaves out documents that mention the standard). Blank-check companies (SIC 6770: SPACs and shells) carry going-concern language in most reports while their liquidation deadline runs, and their number swung widely in 2021–2023; credit.going_concern.filings.ex_blank_check_12m leaves them out. Amendments (10-K/A, 10-Q/A) are left out. EDGAR full-text search does not index Forms 10-KSB and 10-QSB, which small companies used until the SEC retired them in 2008 and early 2009, so the series starts in April 2009. A company's SIC code is the one EDGAR holds today. For S&P 500, Russell 1000 and S&P MidCap 400 companies Palanor reads each matching document and keeps only the filings that conclude doubt exists; those are on company pages, not in this count.

## Source

U.S. Securities and Exchange Commission, EDGAR full-text search (https://efts.sec.gov/LATEST/search-index; https://www.sec.gov/edgar/search/), counted by Palanor. SEC: "Information presented on sec.gov is considered public information and may be copied or further distributed by users of the web site without the SEC's permission."