Audit quality, banks’ equity risk and cross-country regulations

Angela Kate Pettinicchio, Maxim Zagonov, Galla Salganik-Shoshan

Risultato della ricerca: Contributo in rivistaArticolo in rivista

Abstract

The recent turmoil in global financial markets has accentuated the need to better understand the underlying bank risks and their determinants. A vast literature has emerged to analyse this issue in depth. However, the role of auditing in monitoring and shaping bank risks has not hitherto been considered. In this paper we examine the link between audit quality, banks’ equity risk and cross-market regulatory differences in the G10 countries in the run-up to the 2007-2009 financial crisis. We find that higher audit quality is, on average, associated with a lower level of bank risk and this link is stronger in countries with weaker regulations. Our empirical findings bear important strategic implications for bank regulators and supervisors with an interest in improving auditing standards and banking sector policies
Lingua originaleEnglish
pagine (da-a)1666-1687
Numero di pagine22
RivistaEconomics Bulletin
Volume37
Stato di pubblicazionePubblicato - 2017

Keywords

  • AUDIT QUALITY
  • BANK RISK
  • COUNTRY REGULATION

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