Corporate Governance and Firm Performance: A Comparative Analysis on Auditing Matters

42 Pages Posted: 11 Mar 2005

See all articles by Sabrina Auci

Sabrina Auci

University of Rome Tor Vergata - Faculty of Economics; University of Palermo - Department of European Studies and International Integration

Elena D'Agosto

University of Rome Tor Vergata - Faculty of Economics

Date Written: june 2004

Abstract

The recent financial crises are the basis of a new debate about comparison and convergence of different corporate governance systems and they have underlined poor efficiency of rule structures to achieve a good relationship between different stakeholder's rights.

Many studies of corporate governance emphasize the manager-stakeholders relationship as explained by agency theory. In this article, we analyse the role of audit as an incentive device to reduce contractual or transaction costs related to asymmetric information.

Considering as benchmark the recent US Sarbanes Oxley Act of July 2002, we describe a set of audit principles in a comparison of common law and civil law company laws. Using multiple correspondence analysis on six countries and twenty-seven dummy variables on auditing rules, we have defined the main variables that describe auditing index.

Subsequently, we have tested if a suitable rule structure can improve the capability of financial market to estimate the fair value of firms. In particular, we have analysed if direct and indirect monitoring rules on managers could affect the market value of listed firms positively.

Keywords: corporate governance, company law, market structure, firm performance, auditing

JEL Classification: G34, K22, L22, L25, M42

Suggested Citation

Auci, Sabrina and Auci, Sabrina and D'Agosto, Elena, Corporate Governance and Firm Performance: A Comparative Analysis on Auditing Matters (june 2004). Available at SSRN: https://ssrn.com/abstract=677038 or http://dx.doi.org/10.2139/ssrn.677038

Sabrina Auci

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

University of Palermo - Department of European Studies and International Integration ( email )

Via Maqueda, 324
Palermo, Palermo 90134
Italy

Elena D'Agosto (Contact Author)

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

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