The Chinese Monetary Power: The Brazilian Legal Environment as an Important Institutional Variable for the Adoption of the Renminbi in the Chinese Investments in Brazil

SUMMARY We investigate the effects of audit market concentration on audit fees and audit quality in China, where competition is intense and the legal environment is relatively weak compared with developed countries. Analyzing 12,334 firm-year observations for the period 2001 to 2011, we find a significant positive relation between concentration and audit fees. Path analysis shows that concentration improves client earnings quality and reduces the need for auditors to issue modified audit opinions through increased audit fees. Additional analysis indicates that the increased audit fees and client earnings quality resulting from increased concentration are associated with a lower likelihood of executives and auditors being sanctioned by regulators for audit failures. Together, our results suggest that concentration improves audit quality indirectly through increased audit fees and this positive indirect effect offsets the negative direct effect of concentration on audit quality. By separating the direct and the indirect effect of concentration on audit quality, our study would explain why previous studies that do not have a separation document mixed evidence. Our findings inform regulators that actions taken to eliminate the indirect effect of concentration, for example restricting the upper bound of audit fees, could produce unintended outcomes such as decreased audit quality.

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The legal environment, specialized investments, incomplete contracts, and labor productivity

China Economic Review ◽

10.1016/j.chieco.2021.101583 ◽

2021 ◽

Vol 66 ◽

pp. 101583

Author(s):

Junqing Li ◽

Ersen Miao ◽

Jianbo Zhang

Keyword(s):

Labor Productivity ◽

Incomplete Contracts ◽

Legal Environment

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Tackling Illegal Activities Through Tax Law – Al Capone Case Study

DANUBE Law and Economics Review ◽

10.1515/danb-2015-0003 ◽

2015 ◽

Vol 6 (1) ◽

pp. 47-56

Author(s):

Matej Kacaljak

Keyword(s):

Criminal Law ◽

Tax Evasion ◽

Slovak Republic ◽

Basic Structure ◽

Tax Law ◽

Legal Environment ◽

Legal Institutions ◽

The Usa ◽

Illegal Activities

Abstract This paper discusses the Al Capone case and identifies legal institutions which contributed to the conviction of Al Capone for tax evasion in the USA and discusses similarities in Slovak law. The Slovak legal environment is assessed with the aim of identifying potential room for improvement. Under an assumption of identical factual circumstances, it is tested whether Al Capone would be convicted of tax evasion in the Slovak Republic and if not, what would be the main reasons. The paper concludes that due to some, probably unintentional, specifics of Slovak tax and criminal law, Al Capone could not be convicted of tax evasion by the Slovak courts. In our opinion, these specifics do not, however, constitute material elements of the basic structure of Slovak tax and criminal law and could be relatively easily corrected.

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