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

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 efficie...

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Main Author: GUHA, Brishti
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2006
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Online Access:https://ink.library.smu.edu.sg/soe_research/935
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Institution: Singapore Management University
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spelling sg-smu-ink.soe_research-19342010-09-23T05:48:03Z Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff GUHA, Brishti 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. 2006-09-01T07:00:00Z text https://ink.library.smu.edu.sg/soe_research/935 Research Collection School Of Economics eng Institutional Knowledge at Singapore Management University Business Law, Public Responsibility, and Ethics Industrial Organization
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Business Law, Public Responsibility, and Ethics
Industrial Organization
spellingShingle Business Law, Public Responsibility, and Ethics
Industrial Organization
GUHA, Brishti
Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
description 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.
format text
author GUHA, Brishti
author_facet GUHA, Brishti
author_sort GUHA, Brishti
title Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
title_short Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
title_full Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
title_fullStr Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
title_full_unstemmed Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
title_sort honesty and intermediation: corporate cheating, auditor involvement and the implications for takeoff
publisher Institutional Knowledge at Singapore Management University
publishDate 2006
url https://ink.library.smu.edu.sg/soe_research/935
_version_ 1770569343906611200