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Auditor liability rules under imperfect information and costly litigation: the welfare-increasing effect of liability insurance
| Content Provider | Semantic Scholar |
|---|---|
| Author | Ewert, Ralf Feess, Eberhard Nell, Martin |
| Copyright Year | 2000 |
| Abstract | This paper examines auditor liability rules under imperfect information, costly litigation and risk-averse auditors. A negligence rule fails in such a setting, because in equilibrium auditors will deviate with positive probability from any given standard. It is shown that strict liability outperforms negligence with respect to risk allocation and the probability that a desired level of care is met by the auditor if competitive liability insurance markets exist. Furthermore, our model explains the existence of insurance contracts containing obligations a type of contract often observed in liability insurance markets. |
| Starting Page | 371 |
| Ending Page | 385 |
| Page Count | 15 |
| File Format | PDF HTM / HTML |
| DOI | 10.1080/09638180020017122 |
| Alternate Webpage(s) | https://www.econbiz.de/archiv/f/uf/finanzierung/liability_insurance.pdf |
| Alternate Webpage(s) | https://doi.org/10.1080/09638180020017122 |
| Volume Number | 9 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
