The manager and the auditor in a double moral hazard setting : efficiency through contingent fees and insurance contracts

  • Our article integrates the manager’s care in the literature on auditor’s liability. With unobservable efforts, we face a double moral hazard setting. It is well-known that efficient liability rules without punitive damages do not exist under these circumstances. However, we show that the problem can be solved through strict liability, contingent auditing fees, and fair insurance contracts. Neither punitive damages nor deductibles above the damages are required.

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Author:Eberhard Feess, Martin Nell
Parent Title (German):Universität Frankfurt am Main. Fachbereich Wirtschaftswissenschaften: [Working paper series / Finance and accounting] Working paper series, Finance & Accounting ; No. 24
Series (Serial Number):Working paper series / Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting (24)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:1998
Year of first Publication:1998
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2020/08/31
Tag:auditor liability; duble moral hazard; insurance; partnerships; team production problem
GND Keyword:Wirtschaftsprüfung; Haftung; Moral Hazard; Anreizsystem; Haftpflichtversicherung
Page Number:12
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht