Authors: Petter Gottschalk
Addresses: BI Norwegian Business School, Nydalsveien 37, 0484 Oslo, Norway
Abstract: Agency theory suggests that problems in terms of conflicting preferences, knowledge asymmetry and different attitudes towards risks can have a negative impact on work outcome from the agent to the principal. In private internal investigations, the client is the principal, while the fraud examiner is the agent. Based on a sample of 49 reports of investigation from Norway, this article presents empirical results testing agency theory. Results indicate that agency issues do have a significant influence on the contribution from internal investigations, but the influence is not necessarily negative. While different attitudes towards risk have a negative impact, knowledge asymmetry has a positive impact on the contribution from an investigation. A possible explanation for this surprising result is that examiners are experts in other areas than the client, which is the reason why examiners are hired by clients.
Keywords: agency theory; fraud examination; internal investigations; conflicting preferences.
International Journal of Business Continuity and Risk Management, 2018 Vol.8 No.1, pp.36 - 48
Available online: 22 Mar 2018 *Full-text access for editors Access for subscribers Free access Comment on this article