Reform of the Audit Process and the Role of Shareholder Voice: Transatlantic Perspectives

Posted: 2 Nov 2004

See all articles by Anita Anand

Anita Anand

University of Toronto - Faculty of Law

Niamh Moloney

London School of Economics - Law Department; European Corporate Governance Institute (ECGI)

Abstract

In this article, the authors fill a gap in the legal literature surrounding post-Enron corporate governance reform by focusing on the need for enhanced shareholder voice in the auditing process. The authors expand on Anand's analysis in 'Shareholder Isolation and the Regulation of Auditors' with transatlantic perspectives on reform of the audit process. Specifically, they examine the role of the auditor, shareholder powerlessness and the post-Enron reform process in Canada and the UK, contrasting the reform movement in these countries with that in the US. Finally, the authors examine the developing auditor governance regime in the EU. In their analysis, the authors reach several important conclusions: the auditor-shareholder relationship and the duties of auditors to shareholders need to be clearly defined; shareholder isolation from the audit process severely endangers investor confidence; the independence of audit committees and auditors is not enough to protect shareholders; and, most importantly, shareholder voice should be recognised as an essential tool for promoting not only auditor independence, but also, ultimately, investor confidence. In short, the authors conclude that shareholder voice must be a part of the post-Enron reform of the audit process.

Keywords: Shareholder voice, shareholder isolation, shareholder democracy, Enron, Sarbanes-Oxley Act, audit process, audit reform, corporate governance, investor confidence, disclosure

JEL Classification: K2

Suggested Citation

Anand, Anita and Moloney, Niamh, Reform of the Audit Process and the Role of Shareholder Voice: Transatlantic Perspectives. European Business Organization Law Review, Vol. 5, No. 2, 2004. Available at SSRN: https://ssrn.com/abstract=598024

Anita Anand (Contact Author)

University of Toronto - Faculty of Law ( email )

78 Queen's Park
Toronto, Ontario M5S 2C5
Canada
4169464002 (Phone)

Niamh Moloney

London School of Economics - Law Department ( email )

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

European Corporate Governance Institute (ECGI)

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

Register to save articles to
your library

Register

Paper statistics

Abstract Views
856
PlumX Metrics