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Comments on the European Commission Green Paper

Rivista delle Società, Vol. 56, pp. 485-493, 2011

Max Planck Private Law Research Paper No. 10/24

13 Pages Posted: 12 Dec 2010 Last revised: 17 Nov 2015

Walter Doralt

Max Planck Institute for Comparative and International Private Law

Andreas M. Fleckner

Max Planck Institute for Tax Law and Public Finance; Max Planck Institute for Comparative and International Private Law

Klaus J. Hopt

Max Planck Institute for Comparative and International Private Law; European Corporate Governance Institute (ECGI)

Christoph Kumpan

Martin Luther Universitat Halle Wittenberg

Felix Steffek

University of Cambridge - Faculty of Law

Reinhard Zimmermann

Max Planck Institute for Comparative and International Private Law

Alexander Hellgardt

University of Regensburg - Faculty of Law; Max Planck Institute for Tax Law and Public Finance

Susanne Augenhofer

Humboldt University of Berlin

Multiple version iconThere are 2 versions of this paper

Date Written: 2011

Abstract

Trust in the independence of auditors is essential for the functioning of markets. If auditors are not independent or not believed to be independent, transaction costs will rise. In our view, structural weaknesses currently impair auditor independence. We therefore put forward several reform proposals: consulting engagements of statutory auditors should be limited; the fees generated from an audited company should be disclosed; auditors should be appointed for a fixed multi-year period; following an internal rotation, one renewal should be possible; thereafter, an external rotation should be required, excluding the current audit firm from performing the statutory audit for one subsequent term. With these and related measures, trust in the independence of auditors will be restored and strengthened.

Notes: This post-print is published in the Max Planck Private Law Research Paper Series with the permission of the rights owners, Giuffrè Editore. As printed in: Rivista delle società 56 (2011), 485–493. An updated version of this paper, taking into account the draft presented by the European Commission in November 2011, has appeared as Max Planck Private Law Research Paper No. 12/1: http://ssrn.com/abstract=1983204

Keywords: audit, independence, rotation, Big Four, market concentration, internationalization, legal harmonization, standardization

JEL Classification: D43, G15, G18, G38, K22, M42, M48

Suggested Citation

Doralt, Walter and Fleckner, Andreas M. and Hopt, Klaus J. and Kumpan, Christoph and Steffek, Felix and Zimmermann, Reinhard and Hellgardt, Alexander and Augenhofer, Susanne, Comments on the European Commission Green Paper (2011). Rivista delle Società, Vol. 56, pp. 485-493, 2011; Max Planck Private Law Research Paper No. 10/24. Available at SSRN: https://ssrn.com/abstract=1723039

Walter Doralt (Contact Author)

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
Hamburg, D-20148
Germany

HOME PAGE: http://www.mpipriv.de/de/pub/wissenschaftler/affiliates/doralt_walter.cfm#i48541

Andreas M. Fleckner

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
20148 Hamburg
Germany

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
80539 Muenchen
Germany

Klaus J. Hopt

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
D-20148 Hamburg
Germany
+49 40 41 90 02 05 (Phone)
+49 40 41 90 03 02 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Christoph Kumpan

Martin Luther Universitat Halle Wittenberg ( email )

Halle (Saale), Saxony-Anhalt 06108
Germany
+49-345-55-23135 (Phone)

Felix Steffek

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

Reinhard Zimmermann

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
Hamburg, 20148
Germany

Alexander Hellgardt

University of Regensburg - Faculty of Law ( email )

Universitätsstraße 31
Regensburg, 93053
Germany
+49-941-943-2641 (Phone)
+49-941-943-4985 (Fax)

HOME PAGE: http://www.uni-regensburg.de/rechtswissenschaft/buergerliches-recht/hellgardt

Max Planck Institute for Tax Law and Public Finance

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/hellgardt_alexander.html

Susanne Augenhofer

Humboldt University of Berlin ( email )

Spandauer Str. 1
Berlin, Berlin 10785
Germany

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