Intermediary Independence: Auditors, Financial Analysts and Rating Agencies

Journal of Corporate Law Studies, Vol. 11, pp. 33-66, April 2011

34 Pages Posted: 5 Sep 2011

See all articles by Patrick C. Leyens

Patrick C. Leyens

University of Bremen; Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics; European Corporate Governance Institute (ECGI)

Date Written: April 1, 2011

Abstract

Auditors, financial analysts and rating agencies are the most important specialised information intermediaries in capital markets. Information intermediation serves to increase the credibility of issuer disclosure and overcome investor uncertainty. A certain minimum level of independence is the basic prerequisite for information intermediation to be operative. All intermediaries face similar problems in regard to impairments of their independence. Legal standards on independence should be based on a consistent theory. Common principles carved out under contract law serve as an inventory for developing a market-based model of independence. This paper argues that independence should be understood as a correlative to market access. Independence as a correlative to market access should guide the assessment of convergence and remaining divergence in the independence standards applicable to auditors, financial analysts and rating agencies.

Keywords: Information Intermediaries, Corporate Governance, Intermediaries, Independence, Intermediary Independence, Auditors, Financial Analysts, Rating, Rating Agencies, Principles, Contract Law

JEL Classification: G1, G2, G3, F36, K00, K22, L14, L51

Suggested Citation

Leyens, Patrick C., Intermediary Independence: Auditors, Financial Analysts and Rating Agencies (April 1, 2011). Journal of Corporate Law Studies, Vol. 11, pp. 33-66, April 2011, Available at SSRN: https://ssrn.com/abstract=1536764

Patrick C. Leyens (Contact Author)

University of Bremen ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany

Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics ( email )

Burgemeester Oudlaan 50
PO box 1738
Rotterdam, 3000 DR
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
Brussels
Belgium

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