Working Paper

Is auditor independence endogenous: evidence and implications for public policy

Abstract: This paper examines the extent to which firm-specific levels of auditor-independence are codetermined with alternative inputs to governance production. We identify a number of governance-producing mechanisms that are causally or simultaneously related to auditor independence. These results are shown to be robust to omitted variable bias. Consequently, prescriptive regulation of auditor independence will be at least partly offset by firm adjustments on alternative governance-producing margins. ; Original title: Optimization in production of corporate governance - evidence from auditor independence and implications for public policy

Keywords: Public policy; Corporate governance;

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 2004-06-01

Number: RWP 03-13

Pages: 25 pages