Do stocks go down after an auditor raises going-concern doubt?

Going-concern doubts in the auditor's report were followed by a median 1-year return of -49.5% versus SPY (n=8,575), compared with -50.1% when only management raised the doubt (n=23,487).

How did stocks do in the year after an accounting red flag?

Across 56,096 red flags with a full year of price data, the median flagged stock returned -33.3% over the next year and lagged the S&P 500 (SPY) by 46 percentage points; 73% trailed SPY.

Does company size change the result?

Size matters: large caps (over $10B at the flag) had a median 1-year return of -11.0% versus SPY (n=130), mid caps -16.8% (n=573), and nano caps (under $50M) -49.9% (n=35,282).

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What happened next: stock returns after accounting red flags, 2015-2026

Published 2026-10-18 · updated 2026-10-18 · RedFlagFilings research · 102,585 verified red flags from SEC filings, 2015-01-02 to 2026-10-16

Key findings

Across 56,096 red flags with a full year of price data, the median flagged stock returned -33.3% over the next year and lagged the S&P 500 (SPY) by 46 percentage points; 73% trailed SPY.
Going-concern doubts in the auditor's report were followed by a median 1-year return of -49.5% versus SPY (n=8,575), compared with -50.1% when only management raised the doubt (n=23,487).
When a company disclosed going-concern doubt but said its plans or new funding alleviated it, the median 1-year return versus SPY was -36.1% (n=1,015).
Even when the report arrived within the SEC's extension (so it counts as timely), the filing-delay notice was followed by a median 1-year return of -46.0% versus SPY (n=10,407); when the report came after the extension or never came, -51.0% for annual reports (n=2,006).
After 8-K non-reliance / restatement notices the median 1-year return versus SPY was -22.5% (n=1,632); after auditor changes -34.3%, and after routine auditor changes caused by audit-firm mergers -44.9%.
Size matters: large caps (over $10B at the flag) had a median 1-year return of -11.0% versus SPY (n=130), mid caps -16.8% (n=573), and nano caps (under $50M) -49.9% (n=35,282).
3,566 flagged stocks stopped trading within a year (often delisted or bankrupt). Counting them at their last trade moves the 1-year median versus SPY from -46.3% to -42.8%. Flags whose company has no traded ticker today are missing entirely, so the true picture is likely worse.

This is a historical description of what happened on average, not a prediction, a trading strategy or investment advice. Many flagged stocks went up.

What we measured

We took every SEC filing since 2015 that our tracker classifies as an accounting red flag: auditor changes (8-K Item 4.01), non-reliance / restatement notices (8-K Item 4.02), filing-delay notices for annual and quarterly reports (NT 10-K / NT 10-Q; notices whose report came within the extension, which the SEC treats as timely, are a separate, mildest group), and going-concern doubts in 10-K and 10-Q reports (doubts the company says its plans or new funding have alleviated are a separate, lower-severity group). Each one is verified against the filing text with the same rules as the live site. For each flag we measured the stock's return from the last close before the filing to 90 days, 180 days and 1 year later, and the same-dates return of the S&P 500 ETF (SPY). "vs SPY" is the stock's return minus SPY's return (percentage points). "% that trailed SPY" is the share of flags where the stock did worse than SPY.

66,766 of the 102,585 flags (65%) have a usable stock price on the filing date; the rest are companies without a listed ticker today or without price history in our market data (see survivorship). Medians are the main statistic because small-cap returns are extremely skewed; trimmed means drop the top and bottom 5%.

By flag type

Group	90 days after the filing				180 days after the filing				1 year after the filing
Group	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY
All red flags 102,585 flags	63,940	-5.4%	-10.7% trim. mean -10.3%	67%	61,389	-15.0%	-22.4% trim. mean -17.7%	69%	56,096	-33.3%	-46.3% trim. mean -30.9%	73%
Auditor change 9,118 flags	5,939	-4.3%	-8.7% trim. mean -8.9%	65%	5,785	-9.4%	-17.1% trim. mean -16.2%	68%	5,486	-20.3%	-34.3% trim. mean -26.9%	71%
Non-reliance / restatement 2,512 flags	1,871	-0.6%	-5.9% trim. mean -9.5%	59%	1,803	-0.4%	-10.2% trim. mean -13.3%	59%	1,632	-8.0%	-22.5% trim. mean -26.9%	60%
Late annual report, after the extension or missing (NT 10-K) 4,121 flags	2,270	-8.4%	-13.9% trim. mean -11.8%	68%	2,213	-24.8%	-31.9% trim. mean -26.6%	73%	2,006	-38.3%	-51.0% trim. mean -29.6%	74%
Late quarterly report, after the extension or missing (NT 10-Q) 6,985 flags	3,939	-4.7%	-10.5% trim. mean -14.2%	71%	3,733	-10.6%	-19.2% trim. mean -19.0%	72%	3,445	-30.8%	-45.4% trim. mean -31.8%	71%
Going-concern doubt 59,908 flags	37,216	-5.8%	-11.3% trim. mean -9.3%	67%	35,510	-16.7%	-24.1% trim. mean -16.1%	69%	32,105	-36.6%	-49.9% trim. mean -29.3%	74%
Going-concern doubt alleviated 1,543 flags	1,232	-3.3%	-8.9% trim. mean -7.4%	66%	1,167	-9.2%	-17.3% trim. mean -14.6%	66%	1,015	-22.3%	-36.1% trim. mean -29.3%	72%
Filing-delay notice, report filed within extension (NT 10-K / NT 10-Q) 18,388 flags	11,473	-7.0%	-11.4% trim. mean -12.1%	68%	11,178	-16.7%	-23.7% trim. mean -20.9%	70%	10,407	-33.9%	-46.0% trim. mean -35.5%	74%

By detail

Group	90 days after the filing				180 days after the filing				1 year after the filing
Group	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY
Going concern: in the auditor's report (10-K) 16,067 flags	10,074	-6.9%	-12.9% trim. mean -10.9%	67%	9,812	-18.8%	-26.7% trim. mean -18.9%	70%	8,575	-37.1%	-49.5% trim. mean -26.9%	73%
Going concern: management only (10-K or 10-Q) 43,743 flags	27,098	-5.4%	-10.7% trim. mean -8.6%	67%	25,655	-16.1%	-23.1% trim. mean -15.0%	68%	23,487	-36.4%	-50.1% trim. mean -30.2%	74%
Auditor resigned 2,115 flags	1,261	-5.4%	-10.0% trim. mean -9.6%	67%	1,226	-14.3%	-21.9% trim. mean -18.0%	71%	1,168	-26.5%	-40.5% trim. mean -28.7%	74%
Auditor dismissed 4,584 flags	3,030	-3.7%	-7.9% trim. mean -8.1%	64%	2,944	-7.2%	-14.6% trim. mean -14.1%	66%	2,762	-16.1%	-29.5% trim. mean -23.5%	69%
Routine auditor change (audit-firm merger etc.) 1,106 flags	859	-4.9%	-9.5% trim. mean -9.4%	64%	838	-12.0%	-22.4% trim. mean -20.0%	69%	805	-29.4%	-44.9% trim. mean -35.4%	75%
Restatement of the financial statements (severity 5) 2,474 flags	1,846	-0.6%	-5.9% trim. mean -9.4%	59%	1,778	-0.4%	-10.1% trim. mean -13.2%	59%	1,610	-8.0%	-22.5% trim. mean -26.9%	60%
Late annual report: still missing 1,006 flags	355	-16.8%	-20.6% trim. mean -24.3%	75%	336	-50.0%	-56.9% trim. mean -52.8%	83%	279	-66.7%	-73.1% trim. mean -58.9%	85%
Late annual report: filed after the extension 3,115 flags	1,915	-7.1%	-12.7% trim. mean -9.3%	66%	1,877	-20.6%	-27.2% trim. mean -21.6%	71%	1,727	-33.3%	-44.7% trim. mean -24.6%	72%
NT 10-K notice, annual report filed within extension 6,482 flags	4,120	-7.8%	-11.9% trim. mean -12.2%	68%	4,079	-16.9%	-23.9% trim. mean -21.4%	70%	3,718	-29.6%	-40.2% trim. mean -31.8%	73%
NT 10-Q notice, quarterly report filed within extension 11,906 flags	7,353	-6.5%	-11.1% trim. mean -11.9%	68%	7,099	-16.7%	-23.5% trim. mean -20.3%	70%	6,689	-37.2%	-48.9% trim. mean -37.6%	75%

By company size at the flag

Group	90 days after the filing				180 days after the filing				1 year after the filing
Group	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY
Nano-cap (under $50M) 41,165 flags	39,388	-10.4%	-15.1% trim. mean -7.9%	67%	38,012	-20.9%	-27.8% trim. mean -13.9%	69%	35,282	-36.8%	-49.9% trim. mean -23.4%	72%
Micro-cap ($50M-300M) 15,442 flags	14,512	-0.1%	-7.7% trim. mean -11.2%	68%	13,733	-3.6%	-14.6% trim. mean -19.4%	69%	12,053	-24.0%	-38.0% trim. mean -35.7%	74%
Small-cap ($300M-2B) 7,282 flags	6,918	-0.3%	-7.0% trim. mean -11.4%	65%	6,613	-3.6%	-12.8% trim. mean -19.5%	65%	5,894	-24.5%	-36.6% trim. mean -36.2%	71%
Mid-cap ($2B-10B) 659 flags	642	-1.1%	-5.7% trim. mean -5.1%	61%	617	-0.6%	-7.4% trim. mean -8.5%	61%	573	-4.2%	-16.8% trim. mean -16.5%	66%
Large-cap (over $10B) 157 flags	149	-0.1%	-3.3% trim. mean -4.9%	58%	143	+2.8%	-4.6% trim. mean -6.8%	62%	130	+5.0%	-11.0% trim. mean -11.5%	65%
Market cap unknown at the flag 37,880 flags	2,331	-9.1%	-13.6% trim. mean -16.6%	71%	2,271	-27.9%	-34.2% trim. mean -30.8%	76%	2,164	-58.4%	-69.1% trim. mean -54.9%	81%

Market cap on the filing date from our market data provider; flags without a historical market cap are shown separately.

Flag type by size: 1-year return vs SPY (median)

Flag type	Nano-cap	Micro-cap	Small-cap	Mid-cap	Large-cap
Auditor change	-43.5% n=2,537 · 70% trailed	-26.0% n=1,429 · 70% trailed	-29.0% n=1,011 · 73% trailed	-18.3% n=218 · 70% trailed	+0.7% n=58 · 48% trailed
Non-reliance / restatement	-50.8% n=429 · 71% trailed	-0.9% n=532 · 51% trailed	-5.9% n=462 · 54% trailed	-11.6% n=79 · 63% trailed	n=21
Late annual report, after the extension or missing (NT 10-K)	-54.3% n=1,434 · 73% trailed	-41.5% n=335 · 78% trailed	-31.6% n=157 · 75% trailed	n=5	n=7
Late quarterly report, after the extension or missing (NT 10-Q)	-55.9% n=2,234 · 74% trailed	-25.5% n=688 · 67% trailed	-11.7% n=351 · 58% trailed	n=28	n=10
Going-concern doubt	-49.6% n=21,677 · 72% trailed	-46.6% n=6,538 · 77% trailed	-53.9% n=2,609 · 76% trailed	-36.0% n=66 · 62% trailed	n=2
Going-concern doubt alleviated	-42.0% n=397 · 73% trailed	-32.5% n=374 · 72% trailed	-23.7% n=184 · 66% trailed	n=18	n=5
Filing-delay notice, report filed within extension (NT 10-K / NT 10-Q)	-51.2% n=6,574 · 75% trailed	-36.2% n=2,157 · 73% trailed	-34.5% n=1,120 · 70% trailed	-18.1% n=159 · 69% trailed	n=27

Cells with fewer than 30 completed 1-year windows are not shown.

By year of the filing: 1-year return vs SPY

Year	Flags	n (1 year)	median vs SPY	% that trailed SPY
2015	10,884	4,026	-45.7%	74%
2016	9,960	4,183	-34.1%	68%
2017	9,435	4,474	-36.3%	71%
2018	8,732	4,729	-42.7%	75%
2019	8,056	4,964	-46.8%	75%
2020	7,165	5,024	-3.7%	51%
2021	8,948	6,848	-45.1%	70%
2022	10,439	6,808	-50.4%	75%
2023	10,248	6,669	-73.7%	84%
2024	7,288	5,079	-57.6%	78%
2025	5,952	3,292	-59.7%	77%
2026	5,478	0	too few

Robustness: one flag per company per year

Group	90 days after the filing				180 days after the filing				1 year after the filing
Group	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY	n	median return	median vs SPY	% that trailed SPY
All red flags, first per company / type / year 52,493 flags	32,880	-4.7%	-10.3% trim. mean -11.1%	67%	31,893	-13.5%	-21.6% trim. mean -19.6%	69%	28,855	-29.3%	-42.2% trim. mean -29.8%	72%
Auditor change, first per company / year 7,913 flags	5,169	-4.0%	-8.6% trim. mean -8.5%	64%	5,021	-9.1%	-16.7% trim. mean -15.6%	68%	4,750	-19.6%	-33.1% trim. mean -25.8%	71%
Non-reliance / restatement, first per company / year 2,237 flags	1,658	-0.6%	-6.6% trim. mean -9.5%	61%	1,597	-0.3%	-11.0% trim. mean -13.3%	61%	1,462	-8.0%	-22.7% trim. mean -26.7%	60%
Late annual report, after the extension or missing (NT 10-K), first per company / year 4,102 flags	2,257	-8.5%	-14.0% trim. mean -11.8%	68%	2,202	-24.9%	-32.0% trim. mean -26.6%	73%	1,995	-38.2%	-50.9% trim. mean -29.5%	74%
Late quarterly report, after the extension or missing (NT 10-Q), first per company / year 5,046 flags	2,907	-4.7%	-10.5% trim. mean -15.8%	73%	2,725	-10.5%	-19.6% trim. mean -21.5%	73%	2,551	-29.9%	-43.9% trim. mean -31.5%	71%
Going-concern doubt, first per company / year 20,599 flags	12,824	-5.5%	-11.8% trim. mean -11.0%	68%	12,488	-17.5%	-26.3% trim. mean -19.9%	70%	10,906	-35.7%	-48.9% trim. mean -28.5%	73%
Going-concern doubt alleviated, first per company / year 940 flags	753	-2.6%	-8.6% trim. mean -6.5%	64%	721	-8.7%	-16.2% trim. mean -13.1%	66%	609	-19.8%	-32.9% trim. mean -25.9%	69%
Filing-delay notice, report filed within extension (NT 10-K / NT 10-Q), first per company / year 11,646 flags	7,312	-5.5%	-10.3% trim. mean -11.6%	68%	7,139	-14.5%	-21.4% trim. mean -20.4%	69%	6,582	-28.8%	-40.8% trim. mean -32.4%	73%

Companies in trouble file many flags (for example the same going-concern warning in every 10-Q). Counting only the first flag of each type per company and calendar year removes that repetition.

Survivorship and coverage

Year	Flags	with a ticker today	with a price at the flag	complete 1-year window	stopped trading within 1 year	1-year window still open
2015	10,884	51%	37%	4,026	16	0
2016	9,960	57%	42%	4,183	19	0
2017	9,435	64%	48%	4,474	33	0
2018	8,732	71%	55%	4,729	52	0
2019	8,056	79%	62%	4,964	0	0
2020	7,165	87%	71%	5,024	20	0
2021	8,948	94%	81%	6,848	348	0
2022	10,439	95%	83%	6,808	1,419	0
2023	10,248	95%	79%	6,669	924	0
2024	7,288	97%	77%	5,079	496	0
2025	5,952	95%	82%	3,292	239	1,593
2026	5,478	94%	84%	0	0	5,478

Returns are only counted when the stock still had a price at the end of the window. Stocks that stopped trading first (delisted, bankrupt, acquired or deregistered) drop out, and companies whose SEC record no longer has a ticker are missing entirely. Both effects remove many of the worst outcomes, so the averages above are probably better than what an investor actually experienced.

Sensitivity: all flags	90 days	180 days	1 year
Median vs SPY, completed windows only	-10.7% (n=63,940)	-22.4% (n=61,389)	-46.3% (n=56,096)
Median vs SPY, stocks that stopped trading counted at their last close	-10.5% (n=64,818)	-21.3% (n=63,158)	-42.8% (n=59,662)

Method details and caveats

Data: SEC EDGAR full-text search and filings (2015 onward); split- and dividend-adjusted daily closes and historical market caps from our market data provider. Returns start at the last close before the filing date and end at the first close on or after the window end.
Classification: automated, with the rules described on the methodology page, checked by a separate second-opinion verifier and by hand samples. Errors are possible.
Overlap: flags are not independent. Companies often file several flags, and windows overlap in time, so these are descriptive statistics, not significance tests.
Benchmark: SPY is a large-cap index; most flagged companies are micro caps, which have their own (often weaker) returns. Part of the gap is a size effect, which is why results are also shown by size.
Tickers: prices use the company's current SEC ticker (or the ticker on the filing). Tickers that were reused by other companies, reverse splits and thin trading can create data errors; medians limit their effect.
Not advice: nothing here is a recommendation to buy or sell any security. Past returns say nothing certain about the future.

The underlying flags are searchable on the site (flags since Apr 2025 have their own pages; earlier ones appear on company and auditor pages). Summary table as CSV: red-flags-what-happened-next.csv.