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Auditors' legal liability, collusion with management, and investors' loss

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  • GIORA MOORE
  • WILLIAM R. SCOTT

Abstract

. The purpose of this paper is to model the legal exposure of auditors and to study the extent to which limitations on this exposure affect auditors' chosen audit intensity and collusion with management. Résumé. L'article qui suit a pour but de modéliser les risques auxquels sont exposés les vérificateurs de par la loi et de voir dans quelle mesure les limites de ce risque influent sur l'intensité de la vérification dont décident les vérificateurs et sur la collusion avec la direction.

Suggested Citation

  • Giora Moore & William R. Scott, 1989. "Auditors' legal liability, collusion with management, and investors' loss," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 754-774, March.
    • Handle: RePEc:wly:coacre:v:5:y:1989:i:2:p:754-774
    DOI: 10.1111/j.1911-3846.1989.tb00737.x
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    References listed on IDEAS

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    1. Balachandran, Bv & Ramakrishnan, Rts, 1987. "A Theory Of Audit Partnerships - Audit Firm Size And Fees," Journal of Accounting Research, Wiley Blackwell, vol. 25(1), pages 111-126.
    2. Scott, Wr, 1975. "Auditors Loss Functions Implicit In Consumption-Investment Models," Journal of Accounting Research, Wiley Blackwell, vol. 13, pages 98-117.
    3. Steven Shavell, 1984. "A Model of the Optimal Use of Liability and Safety Regulation," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 271-280, Summer.
    4. William P. Rogerson, 1983. "Reputation and Product Quality," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 508-516, Autumn.
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    Cited by:

    1. Mirza, Malik, 1999. "Disclosure of reserves in the annual reports of Australian mining and petroleum firms," Journal of Energy Finance & Development, Elsevier, vol. 4(2), pages 219-238.
    2. Ralf Ewert & Eberhard Feess & Martin Nell, 2000. "Auditor liability rules under imperfect information and costly litigation: the welfare-increasing effect of liability insurance," European Accounting Review, Taylor & Francis Journals, vol. 9(3), pages 371-385.
    3. C. S. Agnes Cheng & Kun Wang & Yanping Xu & Ning Zhang, 2020. "The impact of revealing auditor partner quality: evidence from a long panel," Review of Accounting Studies, Springer, vol. 25(4), pages 1475-1506, December.
    4. Tzu-Ching Weng & Kai-Jui Hsu & Yi-Wei He, 2023. "The Impact of Corporate Political Connections on Analyst Forecast Quality," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 13(6), pages 1-1.
    5. Koch, Christopher & Schunk, Daniel, 2007. "The Case for Limited Auditor Liability - The Effects of Liability Size on Risk Aversion and Ambiguity Aversion," Sonderforschungsbereich 504 Publications 07-04, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    6. Ronald A. Davidson & Dean Neu, 1993. "A Note on the Association between Audit Firm Size and Audit Quality," Contemporary Accounting Research, John Wiley & Sons, vol. 9(2), pages 479-488, March.

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