Publication Type
Working Paper
Version
publishedVersion
Publication Date
9-2005
Abstract
We examine self-enforcing honesty in firm-investor relations in an imperfect public information game. Minimum firm size requirements and moral hazard limit ability to raise outside capital, yielding a floor on personal wealth required to enter entrepreneurship. Credible auditing could create efficiency gains. We propose mandatory disclosure of audit fees and an interpretation of international differences in shareholding patterns. We endogenize auditor-firm collusion and extortion by auditors. We embed our game-theoretic analysis in a general equilibrium model to generate unique equilibria that trace the impact of the distribution of wealth on the existence of the market and consequences for development.
Keywords
Corporate governance, auditing, disclosure, inequality and takeoff, general equilibrium, repeated games
Discipline
Behavioral Economics | Economics
Research Areas
Applied Microeconomics
First Page
1
Last Page
39
Publisher
SMU Economics and Statistics Working Paper Series, No. 18-2005
City or Country
Singapore
Citation
GUHA, Brishti.
Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Development. (2005). 1-39.
Available at: https://ink.library.smu.edu.sg/soe_research/862
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Comments
Published in Seoul Journal of Business, 2012