EconPapers    
Economics at your fingertips  
 

Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Development

Brishti Guha ()

Microeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: We examine self-enforcing honesty in firm-investor relations in an imperfect public information game. Minimum firm size requirements and moral hazard limit ability to raise outside capital, yielding a floor on personal wealth required to enter entrepreneurship. Credible auditing could create efficiency gains. We propose mandatory disclosure of audit fees and an interpretation of international differences in shareholding patterns. We endogenize auditor-firm collusion and extortion by auditors. We embed our game-theoretic analysis in a general equilibrium model to generate unique equilibria that trace the impact of the distribution of wealth on the existence of the market and consequences for development.

Keywords: Corporate governance; moral hazard; vicious circles; inequality and development; general equilibrium; repeated games (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2005-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.eaber.org/node/22426 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.eaber.org/node/22426 [301 Moved Permanently]--> https://www.eaber.org/node/22426 [301 Moved Permanently]--> https://eaber.org/node/22426)

Related works:
Working Paper: Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Development (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eab:microe:22426

Access Statistics for this paper

More papers in Microeconomics Working Papers from East Asian Bureau of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Shiro Armstrong ().

 
Page updated 2021-10-15
Handle: RePEc:eab:microe:22426