ppt课件-collapseofaccountingcausesandcures-yaleuniversity.pptVIP

Auditing and Competition Auditing and Competition: The Policy Dilemma Shyam Sunder, Yale University Midwest Region of the American Accounting Association Mid-Year Meeting, St. Louis April 14, 2007 Overview The demand for auditing arises from our desire to capture efficiencies of competition in the markets for capital and labor through amelioration of information asymmetries It is hardly surprising that we try to apply the same approach—promotion of efficiency through competition--in the audit markets Paradoxically, audit market tends to break down under pressure of competition because of unobservability of quality of audit services—a textbook case of market for lemons The failure to recognize this fundamental property of audit markets led US policy makers to make push for greater competition; their consequences have reverberated since AAA Update and Program for Chicago Meetings Anatomy of Audit Failures Ninety years of antitrust laws and enforcement These laws were not applied to the professions—including doctors, lawyers, accountants, and dentists They kept anticompetitive clauses in the “Code of Ethics” of their respective professions Professional Codes of Ethics No advertising No solicitation of competitors’ clients or customers No solicitation of employees of competitors Most professions justified such clauses in their rules of membership on the basis that they are necessary for “professional” behavior Economics of Restrictions on Professional Competition There were substantive economic arguments to justify restrictions of professional competition Quality of professional services difficult to see Customer/client depends on seller’s recommendation about what he/she should buy Professional must incur time/effort to find out what the customer/client needs, must charge for it Markets for professional services are prone to failure under free competition Market for lemons (Ackerlof)—results would be even worse than the consequences of insufficient competition Theory