I would like to thank Reiner Eichenberger, Bruno Frey, and Andrei Shleifer for feedback and comments.
Auditors and Corporate Governance: Evidence from the Public Sector
Article first published online: 11 APR 2013
© 2013 Blackwell Publishing Ltd.
Volume 66, Issue 2, pages 275–300, May 2013
How to Cite
Schelker, M. (2013), Auditors and Corporate Governance: Evidence from the Public Sector. Kyklos, 66: 275–300. doi: 10.1111/kykl.12021
- Issue published online: 11 APR 2013
- Article first published online: 11 APR 2013
Corporate auditors review and evaluate financial statements. Audit quality depends on auditor expertise and independence. To enhance auditor independence the selection process and auditor rotation requirements have been debated intensively. The available empirical evidence is not conclusive and suffers from serious endogeneity problems. I propose learning from the public sector where auditors play a similar role and present empirical evidence on the impact of auditor expertise, term length and rotation requirements on government performance at the US state level. I find evidence indicating that greater auditor expertise and rotation requirements have a positive effect on state credit ratings.