Abstract
This study investigates the effects of the presence of the external auditor on corporate governance in Portugal, in the way listed companies are managed, based on the verification of compliance with the corporate governance regulations of the Securities Market Commission, as well as the transparency of information and the reduction of agency problems, fraud and economic crimes. By comparing government reports of companies listed on NYSE Euronext Lisbon, during several periods and with surveys conducted in the 1st half of 2013 in Portugal to the external auditors responsible for the majority of the legal certification of accounts of companies during 2007 to 2011, a significant direct relationship in the fulfillment of the recommendations of corporate governance and its verification by the external auditor is concluded. Based on multiple regression and multinomial logistic models, it is concluded that a greater involvement of the ROC in complying with corporate governance recommendations, allows for greater transparency of information and a reduction of agency problems, fraud and economic crimes
Highlights
To understand the effects of the presence of the external auditor on corporate governance in Portugal, that is, to know the way listed companies are managed, to verify the compliance with the corporate governance regulations of the Securities Market Commission (CMVM), to know the transparency of information, the reduction of agency problems, fraud and economic crimes, all this understanding, have a crucial relevance to conclude about the corporate strategy followed by many companies listed on NYSE Euronext Lisbon.Traditionally, corporate governance means the way a firm controls and directs its institutional systems, ethics, social responsibility and accounts
This study investigates the effects of the presence of the external auditor on corporate governance in Portugal, in the way listed companies are managed, based on the verification of compliance with the corporate governance regulations of the Securities Market Commission, as well as the transparency of information and the reduction of agency problems, fraud and economic crimes
The sample is all the external auditors of the commercial companies operating on the NYSE Euronext Lisbon market, which were audited at least once by one of the four reference auditors working in Portuguese territory in a year of the investigation by Deloitte & Associates, SROC SA, EY Audit & Associates - SROC, SA, PricewaterhouseCoopers - Auditores e Consultores, Lda and KPMG & Associados, Sociedade de Revisores Oficiais de Contas, SA
Summary
To understand the effects of the presence of the external auditor on corporate governance in Portugal, that is, to know the way listed companies are managed, to verify the compliance with the corporate governance regulations of the Securities Market Commission (CMVM), to know the transparency of information, the reduction of agency problems, fraud and economic crimes, all this understanding, have a crucial relevance to conclude about the corporate strategy followed by many companies listed on NYSE Euronext Lisbon.Traditionally, corporate governance means the way a firm controls and directs its institutional systems, ethics, social responsibility and accounts. External auditors serve as one of the primary protectors of corporate governance in any entity. The most important role of external auditors in corporate governance, should be to protect the interests of shareholders. External auditors report the state of a company's financial situation and certify the validity of financial reports that may have been released. The accounting principles used by the firm should be appropriate Another role of external auditor is to introduce policies to ensure accountability in the company. External auditors may recommend penalties for officers who manipulate financial statements by cooking accounting numbers or inflating figures. External auditors review the security measures that a firm has in place against corporate fraud or corruption. External auditors help promote corporate governance by conducting period risk assessment
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