Dietrich, M., McHardy, J. and Sharma, A. (2010) Firm corruption in the presence of an auditor. Working Paper. Department of Economics, University of Sheffield ISSN 1749-8368
Abstract
This paper develops a framework to explore firm corruption taking account of interaction with an auditor. The basic idea is that an auditor can provide auditing and other (consultancy) services. The extent of the other services depends on firm profitability. Hence auditor profitability can increase with firm corruption that may provide an incentive to collude in corrupt practices. This basic idea is developed using a game theoretic framework. It is shown that a multiplicity of equilibria exist from stable corruption, through auditor controlled corruption, via multiple equilibria to honesty on behalf of both actors. Following the development of the model various policy options are highlighted that show the difficulty of completely removing corrupt practices.
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | The Sheffield Economics Research Paper (SERP) series offers a forum for the research output of the academic staff and research students of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by a departmental editor. However, the contents and opinions expressed remain the responsibility of the authors. All papers may be downloaded free on the understanding that the contents are preliminary and therefore permission from the author(s) should be sought before they are referenced. |
Keywords: | firm corruption, auditor corruption, perfect equilibrium |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series |
Funding Information: | Funder Grant number ESRC RES-000-22-2004 |
Depositing User: | Repository Officer |
Date Deposited: | 07 Oct 2010 11:30 |
Last Modified: | 05 Jun 2014 07:27 |
Published Version: | http://www.shef.ac.uk/economics/research/serps/yea... |
Status: | Published |
Publisher: | Department of Economics, University of Sheffield |
Identification Number: | Sheffield Economic Research Paper Series 2010016 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:11252 |