Welfare-enhancing fraudulent behavior

• Autores: Haijin Lin, David E.M. Sappington
• Localización: Review of Accounting Studies, ISSN-e 1573-7136, Vol. 20, Nº. 1, 2015, págs. 343-370
• Idioma: inglés
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• Resumen

  • We demonstrate that an increased likelihood of fraud within an organization can benefit both the organization and its auditor. This is the case even though undetected fraud always harms both the organization and the auditor. The increased likelihood of fraud can induce the auditor to increase his auditing effort, which reduces the equilibrium incidence of undetected fraud and thereby benefits both the organization and the selected auditor.