What question did this study set out to answer?

This research explores how collusion between auditors and managers affects corporate governance and production efficiency.

Collusion in Hierarchical Agency

View Full Paper

Ask AI

Bookmark

This research explores how collusion between auditors and managers affects corporate governance and production efficiency.
Developed a theoretical model examining interactions between shareholders, auditors, and managers.
Distinguished between internal and external auditors based on their collusion potential and associated costs.
Analyzed the effects of varying punishment levels on potential bribery and collusion prevention efforts.
Higher manager punishments lead to increased bribes offered to auditors, raising overall collusion costs.
Suboptimal production occurs even with high deterrence measures due to inherent collusion risks.
Optimal contract structures may incorporate random external audits to mitigate collusion risks.

No takes yet. Share an insight, caveat, or question.

Model investigates the impact of corruption in audits on manager accountability and corporate production efficiency.

Kofman et al. (1993) studied this question.

View Full Paper

Ask AI

Bookmark