Bilanzskandale - Eine institutionenökonomische Analyse.

In this paper, recent accounting scandals in Germany are traced back to a serious incentive problem in German auditing law. Since the auditor depends economically on his client, contrary to the legislator's intention, a factual forcing contract is established which enables the client to control his auditor's performance almost completely. As a solution to this problem the proposal of a Demsetz auction of the auditing monopoly is developed, including a mandatory rotation of auditing firms. I shall argue that this proposal not only alleviates the problem of auditing fraud in an incentive-compatible way but may also serve as an effective barrier against concentration in the auditing market. [ABSTRACT FROM AUTHOR]