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Auditors and Corporate Governance: Evidence from the Public Sector

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  • Mark Schelker

Abstract

Corporate auditors review and evaluate financial statements. To enhance independence the selection process and mandatory auditor rotation requirements have been debated intensively. The available empirical evidence is not conclusive and suffers from serious endogeneity problems. We propose learning from the public sector in which auditors play a similar role and present empirical evidence on the impact of auditor term length and rotation requirements on government performance at the US State level. We find evidence indicating that relatively short as well as extended auditor terms have a negative, and rotation requirements have a positive effect on state credit ratings.
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  • Mark Schelker, 2013. "Auditors and Corporate Governance: Evidence from the Public Sector," Kyklos, Wiley Blackwell, vol. 66(2), pages 275-300, May.
    • Handle: RePEc:bla:kyklos:v:66:y:2013:i:2:p:275-300
    DOI: 10.1111/kykl.2013.66.issue-2
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    References listed on IDEAS

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    6. Antle, R, 1984. "Auditor Independence," Journal of Accounting Research, Wiley Blackwell, vol. 22(1), pages 1-20.
    7. Lucian Arye Bebchuk & Jesse M. Fried, 2003. "Executive Compensation as an Agency Problem," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 71-92, Summer.
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    Cited by:

    1. Daniel J. Smith, 2020. "Turn-taking in office," Constitutional Political Economy, Springer, vol. 31(2), pages 205-226, June.
    2. Ali M. Gerged & Babikir Bechir Mahamat & Ibrahim K. Elmghaamez, 2020. "Did corporate governance compliance have an impact on auditor selection and quality? Evidence from FTSE 350," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 51-60, September.
    3. Vilem Cap & Marek Feurich & Martin Lukavec, 2024. ""Action and reaction" - a new public sector effectiveness assessment methodology," International Journal of Economic Sciences, European Research Center, vol. 13(1), pages 106-146, May.
    4. Mark Schelker, 2016. "Unabhängige Finanzkontrolle in der Demokratie," CREMA Working Paper Series 2016-06, Center for Research in Economics, Management and the Arts (CREMA).

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    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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