Докладчик: Людмила Черных (Clemson University)
Тема доклада: "Audit and Fraud: Evidence from Bank Failures"
Тезисы доклада: This study explores the external audit function ability to limit fraud-related bank failures in opaque banking sector. I exploit extremely high bank failures rates in the Russian banking sector during the most recent post-crisis period, including bank failures due to accounting and criminal fraud related cases, to establish two sets of results. On the bright side, I find that higher audit quality is associated with lower likelihood of bank failures that are accompanied with accounting misreporting claims. On the dark side, I find that more subtle and more severe cases of fraud in failed banks, including concealing the true eroded value of risky assets’ portfolios and engagement in criminal activities, remain largely undetected by external auditing firms. I also find that “honest” bank failures, i.e. banks failures for purely financial reasons, are unrelated to audit characteristics. Collectively, the evidence suggests that although bank audit is a valuable tool in resolving asymmetric information in an opaque banking industry, it cannot substitute for the thorough regulatory examination of problem banks.