What is it about?

Highlights the role of audits as vital signals which investors and market analysts rely upon. The ever increasing growth of institutional investors in jurisdictions – particularly those jurisdictions with predominantly concentrated ownership structures, with their increased stakes in corporate equity, also raises the issue of accountability and the question as regards whether increased accountability is fostered where institutional investors assume a greater role – as opposed to position which exists where increased stake of family holdings (family controlled structures) arises.

Featured Image

Why is it important?

Audits serve not only as vital signalling mechanisms - but also credible indicators in a world where transparency and disclosure is increasingly becoming more important - particularly in closed market economies. Do jurisdictions with concentrated ownership structures require less reliance on audits as corporate governance mechanisms and devices? Why do concentrated ownership structures still prevail in certain jurisdictions which are considered to be “market based corporate governance systems”? More importantly, if failures and causes of recent financial crises are principally attributable to the fact that market based corporate governance mechanisms, such as financial regulators, are not optimally performing their functions, why is the role of audits still paramount in such jurisdictions? These are amongst some of the questions which this paper attempts to address.

Perspectives

The ever increasing growth of institutional investors in jurisdictions – particularly those jurisdictions with predominantly concentrated ownership structures, with their increased stakes in corporate equity, also raises the issue of accountability and the question as regards whether increased accountability is fostered where institutional investors assume a greater role – as opposed to position which exists where increased stake of family holdings (family controlled structures) arises.

Prof Marianne Ojo
Northwestern University

Read the Original

This page is a summary of: Audits, Audit Quality and Signalling Mechanisms: Concentrated Ownership Structures, SSRN Electronic Journal, January 2013, Elsevier,
DOI: 10.2139/ssrn.2372511.
You can read the full text:

Read

Resources

Contributors

The following have contributed to this page