IMPACT OF THE INTERPLAY BETWEEN FORMAL AND INFORMAL INSTITUTIONS IN THE CORPORATE GOVERNANCE AND INDEPENDENCE OF AUDIT FIRMS: A COMPARATIVE STUDY OF CEECS

Main Article Content

Małgorzata Godlewska


Keywords : corporate governance and independence of audit firms, formal institutions, informal institutions, Central and Eastern European countries, capital markets
Abstract
The central point of this paper is to present the results of comparative meta-analysis concerning the impact of the interplay between formal and informal institutions in the corporate governance and independence of audit firms of Central and Eastern European Countries (CEECs). The paper focuses on the values of the national Financial Audit Law and national auditors’ code of ethics of CEECs, as well as on independence, professional scepticism, non-audit services, audit fees, mandatory audit firm rotation and joint carrying out of statutory financial audit. The main subject of interest concerns two research areas: the character of the relationship between formal and informal institutions, as well as whether the interplay between them is relevant to corporate governance and independence of audit firms of CEECs.

Article Details

How to Cite
Godlewska, M. (2020). IMPACT OF THE INTERPLAY BETWEEN FORMAL AND INFORMAL INSTITUTIONS IN THE CORPORATE GOVERNANCE AND INDEPENDENCE OF AUDIT FIRMS: A COMPARATIVE STUDY OF CEECS. Acta Scientiarum Polonorum. Oeconomia, 19(1), 23–32. https://doi.org/10.22630/ASPE.2020.19.1.3
References

Accountancy Europe (2018). Organisation of the public oversight of the audit profession in Europe. State of affairs after the implementation of the 2014 Audit Reform. Survey.

Accountancy Europe (2019). Member States' Implementation of New EU Audit Rules. State of Play as of February 2019.

Beeler, J.D., Hunton, J.E. (2001). Contingent economic rents: Insidious threats to audit independence. Advances in Accounting Behavioral Research, 5, 21-50. (Crossref)

Blair, M.M. (1995). Rethinking Assumptions Behind Corporate Governance. Challenge, 38 (6), 12-17. (Crossref)

Blay, A.D., Geiger, M.A. (2013). Auditor Fees and Auditor Independence: Evidence from Going Concern Reporting Decisions. Contemporary Accounting Research, 30 (2), 579-606. (Crossref)

Cadbury, A. (1992). Report of the Committee on the Financial Aspects of Corporate Governance. The Committee On the Financial Aspects of Corporate Governance and Gee and Co. Ltd., London.

Cohen, J., Krishnamoorthy, G., Wright, A. (2004). The Corporate Governance Mosaic and Financial Reporting Quality. Journal of Accounting Literature, 87-152.

Cohen, M.F. (Ed.) (1978). Report, Conclusions and Recommendations. The Commission on Auditor's Responsibilities, New York.

Commission Recommendation of 5 June 2008 concerning the limitation of the civil liability of statutory auditors and audit firms. C(2008) 2274. OJ L 162/39 of 21.06.2008.

DeAngelo, L.E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3, 183-199. (Crossref)

Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 amending Directive 2006/43/ EC on statutory audits of annual accounts and consolidated accounts. OJ L 158/196 of 27.5.2014.

Dunn, K.A., Mayhew, B.W. (2004). Audit Firm Industry Specialization and Client Disclosure Quality. Review of Accounting Studies, 9 (1), 35-58. (Crossref)

European Bank for Reconstruction and Development (2017). Corporate Governance in Transition Economies Country Report from Bulgaria, Croatia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia, Slovenia. London.

European Commission (2007). European Cultural Values. Special Eurobarometer 278.

European Commission (2017a). Businesses' attitudes towards corruption in the EU. Report. Flash Eurobarometer 457.

European Commission (2017b). Corruption. Report. Special Eurobarometer 470.

Financial Reporting Council (2016). The UK Corporate Governance Code. London.

Godlewska, M., Pilewicz, T. (2018). The Impact of Interplay Between Formal and Informal Institutions on Corporate Governance Systems: A Comparative Study of CEECs. Comparative Economic Research, 21 (4), 85-104. (Crossref)

Green Paper on Audit Policy. Lessons from the Crisis. COM/2010/0561 final of 13.10.2010. (Crossref)

Hampel, R. (1998). Committee on Corporate Governance. Final Report. The Committee on Corporate Governance and Gee Publishing Ltd., London.

Hardies, K., Breesch, D., Branson, J. (2012). Auditor Independence Impairment: Bonding Between Clients and Individual Engagement Partners. Paper presented at 2012 Auditing Section Midyear Conference [manuscript]. (Crossref)

Heliodoro, P., Lopes, M.M., Pinho, C.S., Ramos, R. (2016). The Impact of Audit Reports on Auditor Change - Verification of the Determining Factors for Auditor Change in the Portuguese Context. International Journal of Business and Social Science, 7 (10), 1-13.

Helmke, G., Levitsky, S. (2004). Informal Institutions and Comparative Politics: A Research Agenda. Perspectives on Politics, 2 (4), 725-740. (Crossref)

Jennings, M.M., Pany, K.J., Reckers, P.M.J. (2006). Strong Corporate Governance and Audit Firm Rotation: Effects on Judges' Independence Perceptions and Litigation Judgments. Accounting Horizons, 20 (3), 253-270. (Crossref)

Johnstone, K.M., Warfield, T.D., Sutton, M.H. (2001). Antecedents and Consequences of Independence Risk: Framework for Analysis. Accounting Horizons, 15 (1), 1-18. (Crossref)

Jüttig, J., Drechsler, D., Bratsch, S., Soysa, I. de (Eds.) (2007). Informal institutions: How social norms help or hinder development. OECD Publishing, Paris. https://doi.org/10.1787/9789264039070-en (Crossref)

La Porta, R., Lopez-de-Silanes, F., Pop-Eleches, C., Shleifer, A. (2004). Judicial checks and balances. Journal of Political Economy, 112 (2), 445-470. (Crossref)

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., Vishny, R. (1998). Law and finance. Journal of Political Economy, 106 (6), 1113-1155. (Crossref)

Lennox, C.S. (2005). Audit quality and executive officers' affiliations with CPA firms'. Journal of Accounting and Economics, 39, 201-231. (Crossref)

Lewis, R.D. (2006). When Cultures Collide: Leading Across Cultures. Nicholas Brealey International, London.

Markelevich, A., Rosner, R.L. (2013). Auditor Fees and Fraud Firms. Contemporary Accounting Research, 30 (4), 1590-1625. (Crossref)

Martinov-Bennie, N., Cohen, J., Simnett, R. (2011). The Effect of Affiliation on Auditor Independence. Managerial Auditing Journal, 26 (8), 656-671. (Crossref)

Nicolaescu, E. (2013). The Impact of Mandatory Audit Firm Rotation on Audit Quality and Auditor Independence. Psychosociological Issues in Human Resource Management, 1 (2), 64-69.

Quick, R. (2012). EC Green Paper Proposals and Audit Quality. Accounting in Europe, 9 (1), 17-38. (Crossref)

Regulation (EU) No 537/2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC. OJ L 158/77 of 27.05.2014.

Schwartz, S.H., Bardi, A. (1997). Influences of Adaptation to Communist Rule on Value Priorities in Eastern Europe. Political Psychology, 18 (2), 385-410. (Crossref)

Sikka, P. (2004). Some questions about the governance of auditing firms. International Journal of Disclosure and Governance, 1 (2), 186-200. (Crossref)

Stulz, R.M., Williamson, R. (2003). Culture, openness, and finance. Journal of Financial Economics, 70 (3), 313-349. (Crossref)

Tepalagul, N., Lin, L. (2015). Auditor Independence and Audit Quality: A Literature Review. Journal of Accounting, Auditing & Finance, 30 (1), 101-121. (Crossref)

Statistics

Downloads

Download data is not yet available.