In most economic exchanges resources must be devoted to prevent the parties from seeking to further their own interests to the prejudice of a successful outcome to the exchange. If this were not so, not only the achievements but also the very existence of the exchange would be threatened as happens when, before contracting, the other participants anticipate the possibility of being subjected to opportunistic conduct. To ensure that the agreement is fulfilled, in addition to using external mechanisms, most importantly represented by the legal system, a series of instruments develop which can be classified as “market” instruments. These essentially consist in introducing automatic penalties for non-compliance, pursuant to which the party who is obliged to perform will be castigated if others in the marketplace ascertain that he has failed to comply with his obligations to another of their number.
KeywordsAudit Firm Audit Quality Specific Asset Informational Asymmetry Auditor Independence
Unable to display preview. Download preview PDF.