The role of external auditors in corporate governance: agency problems and the management of risk
AbstractThis paper not only recommends means whereby principal-agent problems could be addressed, but also considers various ways in which the external auditor and audit committees contribute as corporate governance tools. The impact of bank regulations on risk taking and the need for a consideration of ownership structures are amongst other issues which are considered. In acknowledging the issues raised by ownership structures, it considers theories such as the banking theory and corporate governance theory. It also considers other alternatives whereby risk taking could be controlled. In recommending the external auditor’s expertise to address principal agent problems, it draws attention to the audit committee’s roles, both as a vital and complementary corporate governance tool, and also considers recurring problems which still persist with some financial reporting standards. It also highlights the importance of measures which need to be in place if the external auditor’s contribution to corporate governance is to be maximised.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 28149.
Date of creation: 06 Jul 2009
Date of revision: 14 Jan 2011
corporate governance; banking theory; risk; ownership structures; auditor; disclosure; principal; agent; regulation; moral hazard;
Other versions of this item:
- Ojo, Marianne, 2009. "The role of external auditors in corporate governance: agency problems and the management of risk," MPRA Paper 47346, University Library of Munich, Germany, revised 02 Jun 2013.
- K2 - Law and Economics - - Regulation and Business Law
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- G3 - Financial Economics - - Corporate Finance and Governance
- G0 - Financial Economics - - General
- A10 - General Economics and Teaching - - General Economics - - - General
- M4 - Business Administration and Business Economics; Marketing; Accounting - - Accounting
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vitols, Sigurt, 1995. "Corporate governance versus economic governance: banks and industrial restructuring in the US and Germany," Discussion Papers, Research Unit: Economic Change and Employment FS I 95-310, Social Science Research Center Berlin (WZB).
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