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Auditor expertise: Evidence from the public sector

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  • Schelker, Mark

Abstract

This paper is the first attempt to study the relationship between public auditor expertise and fiscal performance. I find that states requiring the auditor to hold a professional degree feature significantly higher credit ratings and lower expenditures and debt.

Suggested Citation

  • Schelker, Mark, 2012. "Auditor expertise: Evidence from the public sector," Economics Letters, Elsevier, vol. 116(3), pages 432-435.
  • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:432-435
    DOI: 10.1016/j.econlet.2012.04.051
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    1. Brenda Van Tendeloo & Ann Vanstraelen, 2008. "Earnings Management and Audit Quality in Europe: Evidence from the Private Client Segment Market," European Accounting Review, Taylor & Francis Journals, vol. 17(3), pages 447-469.
    2. Anderson, Sarah & Habel, Philip, 2009. "Revisiting Adjusted ADA Scores for the U.S. Congress, 1947–2007," Political Analysis, Cambridge University Press, vol. 17(1), pages 83-88, January.
    3. von Hagen, Jurgen & Wolff, Guntram B., 2006. "What do deficits tell us about debt? Empirical evidence on creative accounting with fiscal rules in the EU," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3259-3279, December.
    4. Alesina, Alberto & Perotti, Roberto, 1996. "Fiscal Discipline and the Budget Process," American Economic Review, American Economic Association, vol. 86(2), pages 401-407, May.
    5. Mark Schelker, 2012. "The influence of auditor term length and term limits on US state general obligation bond ratings," Public Choice, Springer, vol. 150(1), pages 27-49, January.
    6. Sattar A. Mansi & William F. Maxwell & Darius P. Miller, 2004. "Does Auditor Quality and Tenure Matter to Investors? Evidence from the Bond Market," Journal of Accounting Research, Wiley Blackwell, vol. 42(4), pages 755-793, September.
    7. Alt, James E. & Lassen, David Dreyer, 2006. "Fiscal transparency, political parties, and debt in OECD countries," European Economic Review, Elsevier, vol. 50(6), pages 1403-1439, August.
    8. Claudio Ferraz & Frederico Finan, 2008. "Exposing Corrupt Politicians: The Effects of Brazil's Publicly Released Audits on Electoral Outcomes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 703-745.
    9. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    10. James E. Alt & David Dreyer Lassen & Shanna Rose, 2006. "The Causes of Fiscal Transparency: Evidence from the American States," EPRU Working Paper Series 06-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    11. Schelker, Mark & Eichenberger, Reiner, 2010. "Auditors and fiscal policy: Empirical evidence on a little big institution," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 357-380, December.
    12. Benjamin A. Olken, 2007. "Monitoring Corruption: Evidence from a Field Experiment in Indonesia," Journal of Political Economy, University of Chicago Press, vol. 115, pages 200-249.
    13. von Hagen, Jurgen & Harden, Ian J., 1995. "Budget processes and commitment to fiscal discipline," European Economic Review, Elsevier, vol. 39(3-4), pages 771-779, April.
    14. Leuz, Christian & Nanda, Dhananjay & Wysocki, Peter D., 2003. "Earnings management and investor protection: an international comparison," Journal of Financial Economics, Elsevier, vol. 69(3), pages 505-527, September.
    15. Mark Schelker & Reiner Eichenberger, 2003. "Starke Rechnungsprüfungskommissionen: Wichtiger als direkte Demokratie und Föderalismus? Ein erster Blick auf die Daten," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(III), pages 351-373, September.
    16. Reiner Eichenberger & Mark Schelker, 2007. "Independent and competing agencies: An effective way to control government," Public Choice, Springer, vol. 130(1), pages 79-98, January.
    17. Yu, Fang (Frank), 2008. "Analyst coverage and earnings management," Journal of Financial Economics, Elsevier, vol. 88(2), pages 245-271, May.
    18. Eichenberger, Reiner, 1994. "The Benefits of Federalism and the Risk of Overcentralization," Kyklos, Wiley Blackwell, vol. 47(3), pages 403-420.
    19. Craig Depken & Courtney Lafountain, 2006. "Fiscal consequences of public corruption: Empirical evidence from state bond ratings," Public Choice, Springer, vol. 126(1), pages 75-85, January.
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    Cited by:

    1. Mark Schelker, 2016. "Unabhängige Finanzkontrolle in der Demokratie," CREMA Working Paper Series 2016-06, Center for Research in Economics, Management and the Arts (CREMA).
    2. John A. Dove & Courtney A. Collins & Daniel J. Smith, 2018. "The impact of public pension board of trustee composition on state bond ratings," Economics of Governance, Springer, vol. 19(1), pages 51-73, February.
    3. Niccolò Persiani & Alberto Romolini & Claudia Galanti, 2015. "Il nuovo sistema di controlli di regolarità amministrativa e contabile nel Servizio Sanitario Italiano: i Percorsi Attuativi della Certificabilità," MECOSAN. Menagement e economia sanitaria, FrancoAngeli Editore, vol. 2015(94), pages 31-50.

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    More about this item

    Keywords

    Public auditor; Auditor expertise; Auditor competence;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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