THE ROLE OF THE EXTERNAL AUDITOR IN CORPORATE GOVERNANCE: THE CASE OF COMPANIES LISTED IN THE NYSE EURONEXT LISBON

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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.

Keywords: Legal Certification of Accounts, Governance of Listed Companies, Transparency of Information, Agency Theory

Received: 7.12.2018
Accepted: 21.01.2019
Published online: 22.01.2019

How to cite this paper: Vaz Ferreira, J. M. (2018). The role of the external auditor in corporate governance: The case of companies listed in the NYSE Euronext Lisbon. Risk Governance and Control: Financial Markets & Institutions, 8(4), 38-51. https://doi.org/10.22495/rgcv8i4p5