法律制度,审计质量和投资【外文翻译】.pdfVIP

外文翻译 Legal Regimes, Audit Quality and Investment Material Source:The Accounting Review Vol 72,No.3 July 1997 pp.385-406 Author:Rachel Schwartz I. INTRODUCTION The purpose of this paper is to explore the impact of auditors legal liability on audit quality and investment. The analysis extends the current literature on auditors liability under Federal Securities Laws by showing how damage measures can directly affect levels of investments. Specifically, I show that even though auditors liability can improve the audit quality which could promote socially optimal investments, a liability regime that includes an improper damage measure (such as. the typical out-of-pocket measure currently used) induces excessive investment. Previous literature on auditors liability has generally focused on the impact of liability rules on audit quality (e.g., Balachandran and Nagarajan 1987; Dye 1993; Melumad and Thoman 1990; Narayanan 1994; Nelson et al. 1988; Palmrose 1994; Schwartz 1997; Smith and Tidrick 1997). The models describe an equilibrium phenomenon for auditing effort. An implicit assumption in these studies is that because higher audit quality provides better information to investors, the legal regime that induces the highest audit quality also generates the most efficient investment. Although better information allows investors to make more efficient investments, we cannot assume that the better information induced by legal liability is also sufficient to guarantee a socially optimal level of investment. Liability payments that motivate auditors to work hard are basically transfer payments from auditors to investors. If investors can affect the amount of these payments by alter