Is auditor independence endogenous: evidence and implications for public policy

Dino Falaschetti and Michael Orlando ()

No RWP 03-13, Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: This paper examines the extent to which firm-specific levels of auditor-independence are codetermined with alternative inputs to governance production. We identify a number of governance-producing mechanisms that are causally or simultaneously related to auditor independence. These results are shown to be robust to omitted variable bias. Consequently, prescriptive regulation of auditor independence will be at least partly offset by firm adjustments on alternative governance-producing margins. ; Original title: Optimization in production of corporate governance - evidence from auditor independence and implications for public policy

Keywords: Public policy; Corporate governance (search for similar items in EconPapers)
Pages: 25 pages
Date: 2003-12-01
New Economics Papers: this item is included in nep-acc
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