Fatal attractions in the agency relationship

Abstract

This paper shows how public interest accounting can be considered a monitoring service in an agency theory sense, and as such, forms part of the optimal bundle of services offered to a client by a professional firm. The arguments are illustrated with respect to the white collar crime market. A crime valuation equation provides empirical estimates of the wealth affects of an average crime; data is then used to assess the derived demand for a new white collar crime monitoring service. In the spirit of positive accounting research, the paper supplies extensive empirical evidence to show that accountants are already heavily engaged in the white collar crime market; these services form part of the utility maximising equilibrium that is a public as well as a private optimum.