Auditor Expertise: Evidence from the Public Sector
AbstractPublic Auditors are fundamental institutions to supervise government agents. Without accurate information principals would find it hard to make adequate decisions. Since agents face strong incentives to misreport, competent audits of financial information are crucial. This paper is the first attempt to study the relationship between auditor expertise and fiscal performance. More competent auditors are more effective supervisors; they reduce the leeway of agents to misreport and improve fiscal outcomes. The empirical results support this hypothesis. I find that States requiring the auditor to hold a professional degree feature significantly lower debt and expenditures as well as higher credit ratings.
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Bibliographic InfoPaper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2009-20.
Date of creation: Aug 2009
Date of revision:
public auditor; auditor expertise; auditor competence;
Other versions of this item:
- Schelker, Mark, 2012. "Auditor expertise: Evidence from the public sector," Economics Letters, Elsevier, vol. 116(3), pages 432-435.
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- H10 - Public Economics - - Structure and Scope of Government - - - General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2009-10-03 (Accounting & Auditing)
- NEP-ALL-2009-10-03 (All new papers)
- NEP-CTA-2009-10-03 (Contract Theory & Applications)
- NEP-PBE-2009-10-03 (Public Economics)
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