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The Challenge of “Doing Business with Strangers”: Audit Reports as a “Signaling Instrument

Year 2023, Volume: 7 Issue: 2, 1239 - 1258, 25.05.2023
https://doi.org/10.25295/fsecon.1197653

Abstract

This paper discusses how firms in Turkey have used audit reports of companies like Deloitte as a "costly signaling" instrument. The paper shows that the firms integrating into the global economy during 1990s were in intense competition to find global business partners. The need to do "business with strangers" created a new challenge for this firms: Broadcasting strong signals proving the capacity of being a reliable, long-standing business partner. When the partnerships were formed in smaller business circles, these signals were produced by face-to-face social interactions. But when the entrepreneurs cooperate/negotiate with firms from different national and cultural backgrounds, audit reports from prestigious companies became a universal signal about the firms' reliability. To illustrate the transformation in this "signaling" process, we conduct in-depth interviews with the managers of auditing firms, entrepreneurs and did an archival study on many resources of the period.

References

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  • Balikci, E. (2014). Girişimciliğin Farklı Yüzleri: 1950 ve 1980'lerde Türkiye'de Değişen İşadamı Davranışları. Girişimcilik ve Kalkınma Dergisi, 272-295.
  • Bali, R. (2002). Tarz-I Hayattan Life Style: Yeni Seçkinler, Yeni Mekanlar, Yeni Yaşamlar. İstanbul: İletişim Yayınları.
  • Baskin, J. B. (1988). The development of corporate financial markets in Britain and the United States, 1600–1914: Overcoming asymmetric information. Business History Review, 62(2), 199-237.
  • Behar, D. (2012). Türk Burjuvazisinin Üçüncü Kuşağı. Birikim, 278-279: 73-89.
  • Buğra, A. (1997). Devlet ve İş adamları. İstanbul: İletişim Yayınları.
  • Buğra, A. & Savaşkan O. (2015). Türkiye’de Yeni Kapitalizm; Siyaset, Din ve İş Dünyası. İstanbul: Iletişim Yayınları.
  • Camic, C. (2020). Veblen. Boston: Harvard University Press.
  • Dasgupta, P. (2007). Economics: A Very Short Introduction. Newyork: Oxford.
  • Davanzati, G.F. & Pacella A. (2014). Thorstein Veblen on Credit and Economic Crises. Cambridge Journal of Economics, 38(5): 1043–61.
  • Dolfsma, W. (2019). Institutionalized Communication in Markets and Firms. Journal of Economic Issues, 53(2):341-348.
  • Durkheim, É. (1949). The Division of Labor in Society. Translated from the French by George Simpson. Free Press.
  • Evans, L. (2003). Auditing and Audit Firms in Germany Before 1931. Accounting Historians, 30 (2): 29–65.
  • Feldman, M. S., & March, J. G. (1981). Information in organizations as signal and symbol. Administrative science quarterly, 171-186..
  • Ganley, W. T. (2004). The theory of business enterprise and Veblen’s neglected theory of corporation finance. Journal of Economic Issues, 38(2), 397-403.
  • Habermas, J. (1991). The Structural Transformation of The Public Sphere: An Inquiry Into A Category of Bourgeois Society. Cambridge: MIT Press.
  • Hayek, F. A. (1998). The Fatal Conceit: The Errors of Socialism. London: Rotledge Press.
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  • https://Data.Worldbank.Org/Indicator/Bx.Klt.Dinv.Wd.Gd.Zs?End=2019&Locations=Tr&Start=1970&View=Chart (Accessed 24 August 2021).
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  • Karaomerlioğlu, A. & Balikci, E. (2013). The ‘Forgotten’ People: Turkey’s Artisans İn The 1950s. British Journal Of Middle Eastern Studies, 40 (2): 183–204.
  • Kıraç, C. (1995). Anılarımla Patronum: Vehbi Koç. İstanbul: Milliyet Yayınları.
  • Kocabıyık, A. (2004). Tazlar Köyünden Borusan'a. İstanbul: Doğan Kitap.
  • Kepenek, Y. (2012). Türkiye Ekonomisi. İstanbul: Remzi Kitabevi.
  • Marshall, A. (2009). Principles of Economics: Unabridged Eighth Edition. New York: Cosimo.
  • Martha S. F. & James G. M. (1981). Information In Organizations As Signal and Symbol. Administrative Science Quarterly, 26 (2): 174-179.
  • Nahum, B. (1988). Koç'ta 44 Yılım : Bir Otomativ Sanayii Kuruluyor, İstanbul: Milliyet Yayınları
  • Ozatay, F. & Guven S. (2002). Financial Liberalization in Turkey: Why The Impact on Growth Was Limited?. Emerging Markets Finance & Trade, 38 (5): 6-22.
  • Özdemir. Ş. (2006). MÜSİAD: Anadolu Sermayesinin Dönüşümü ve Türk Modernleşmesinin Derinleşmesi. Ankara : Vadi Yayınları
  • Rutherford, M. (1981). Clarence Ayres and The Instrumental Theory of Value. Journal of Economic Issues, 15 (3): 657–673.
  • Saad, G. (2003). Evolution and Political Marketing. In Human Nature and Public Policy: An Evolutionary Approach, edited by Albert Somit and Steven Peterson, 121-138. London: Palgrave Macmillan.
  • Soral, E. (1974). Özel Kesimde Türk Müteşebbisleri. Ankara: Ankara İktisadi ve Ticari İlimler Akademisi.
  • Sun, G. Z. (2005). Readings in the Economics of the Division of Labor: The Classical Tradition (Vol. 2). World Scientific.
  • Teck-Heang L. & Azham A. (2008). The Evolution Of Auditing: An Analysis Of The Historical Development. Journal Of Modern Accounting And Auditing, 4 (12). Https://Www.Researchgate.Net/Profile/Azham-Md-Ali/Publication/339251518_The_Evolution_Of_Auditing_An_Analysis_Of_The_Historical_Development/Links/5e45ec9f458515072d9a7bfb/The-Evolution-Of-Auditing-An-Analysis-Of-The-Historical-Development.Pdf
  • Tilman, R. (2006). Colin Campbell on Thorstein Veblen on Conspicuous Consumption. Journal of Economic, Issues 40 (1): 97–112.
  • Veblen, T. (1908). ‘On The Nature of Capital. Journal of Economics, 22 (4): 517-42.
  • Veblen, T. (1901). Industrial and Pecuniary Employments. Publications Of The American Economic Association, 3 (2): 190-235.
  • Yenturk, N. (2005). Körlerin Yürüyüşü; Türkiye Ekonomisi ve 1990 Sonrası Krizler. Istanbul:Istanbul Bilgi Universitesi Yayinlari.
Year 2023, Volume: 7 Issue: 2, 1239 - 1258, 25.05.2023
https://doi.org/10.25295/fsecon.1197653

Abstract

References

  • Akdoğu, E. (2011). Türkiye’de 1988-2008 dönemindeki firma birleşmeleri, birleşme dalgaları ve genel tablo. Muhasebe ve Finansman Dergisi, (52), 137-152.
  • Arrow, K. J. (1984). The Economics of Information. Massachusetts: The Belknap Press of Harvard University Press.,
  • Balikci, E. (2015). Business Association as A Regulatory Institution and Its Relation with Nationstate: The Case of Gaziantep and Nicosia. The 2015 Wei International Academic Conference Proceedings, Vienna Austria.
  • Balikci, E. (2014). Girişimciliğin Farklı Yüzleri: 1950 ve 1980'lerde Türkiye'de Değişen İşadamı Davranışları. Girişimcilik ve Kalkınma Dergisi, 272-295.
  • Bali, R. (2002). Tarz-I Hayattan Life Style: Yeni Seçkinler, Yeni Mekanlar, Yeni Yaşamlar. İstanbul: İletişim Yayınları.
  • Baskin, J. B. (1988). The development of corporate financial markets in Britain and the United States, 1600–1914: Overcoming asymmetric information. Business History Review, 62(2), 199-237.
  • Behar, D. (2012). Türk Burjuvazisinin Üçüncü Kuşağı. Birikim, 278-279: 73-89.
  • Buğra, A. (1997). Devlet ve İş adamları. İstanbul: İletişim Yayınları.
  • Buğra, A. & Savaşkan O. (2015). Türkiye’de Yeni Kapitalizm; Siyaset, Din ve İş Dünyası. İstanbul: Iletişim Yayınları.
  • Camic, C. (2020). Veblen. Boston: Harvard University Press.
  • Dasgupta, P. (2007). Economics: A Very Short Introduction. Newyork: Oxford.
  • Davanzati, G.F. & Pacella A. (2014). Thorstein Veblen on Credit and Economic Crises. Cambridge Journal of Economics, 38(5): 1043–61.
  • Dolfsma, W. (2019). Institutionalized Communication in Markets and Firms. Journal of Economic Issues, 53(2):341-348.
  • Durkheim, É. (1949). The Division of Labor in Society. Translated from the French by George Simpson. Free Press.
  • Evans, L. (2003). Auditing and Audit Firms in Germany Before 1931. Accounting Historians, 30 (2): 29–65.
  • Feldman, M. S., & March, J. G. (1981). Information in organizations as signal and symbol. Administrative science quarterly, 171-186..
  • Ganley, W. T. (2004). The theory of business enterprise and Veblen’s neglected theory of corporation finance. Journal of Economic Issues, 38(2), 397-403.
  • Habermas, J. (1991). The Structural Transformation of The Public Sphere: An Inquiry Into A Category of Bourgeois Society. Cambridge: MIT Press.
  • Hayek, F. A. (1998). The Fatal Conceit: The Errors of Socialism. London: Rotledge Press.
  • Herrigel, G. (1995). Industrial Constructions: The Sources of German Industrial Power. Cambridge: Cambridge University Press. https://www.Theglobaleconomy.Com/Turkey/Stock_Market_Capitalization_Dollars/ (Accessed 24 July 2021).
  • https://Data.Worldbank.Org/Indicator/Bx.Klt.Dinv.Wd.Gd.Zs?End=2019&Locations=Tr&Start=1970&View=Chart (Accessed 24 August 2021).
  • https://Www.Hmb.Gov.Tr/Duyuru/30-Eylul-2020-Tarihi-Itibariyla-Turkiye-Brut-Ve-Net-Dis-Borc-Stoku (Accessed 21 August 2021).
  • Hunt, E.K. & Mark L. (2015). History of Economic Though. A Critical Perspective. Routledge: 327-331.
  • Karaomerlioğlu, A. & Balikci, E. (2013). The ‘Forgotten’ People: Turkey’s Artisans İn The 1950s. British Journal Of Middle Eastern Studies, 40 (2): 183–204.
  • Kıraç, C. (1995). Anılarımla Patronum: Vehbi Koç. İstanbul: Milliyet Yayınları.
  • Kocabıyık, A. (2004). Tazlar Köyünden Borusan'a. İstanbul: Doğan Kitap.
  • Kepenek, Y. (2012). Türkiye Ekonomisi. İstanbul: Remzi Kitabevi.
  • Marshall, A. (2009). Principles of Economics: Unabridged Eighth Edition. New York: Cosimo.
  • Martha S. F. & James G. M. (1981). Information In Organizations As Signal and Symbol. Administrative Science Quarterly, 26 (2): 174-179.
  • Nahum, B. (1988). Koç'ta 44 Yılım : Bir Otomativ Sanayii Kuruluyor, İstanbul: Milliyet Yayınları
  • Ozatay, F. & Guven S. (2002). Financial Liberalization in Turkey: Why The Impact on Growth Was Limited?. Emerging Markets Finance & Trade, 38 (5): 6-22.
  • Özdemir. Ş. (2006). MÜSİAD: Anadolu Sermayesinin Dönüşümü ve Türk Modernleşmesinin Derinleşmesi. Ankara : Vadi Yayınları
  • Rutherford, M. (1981). Clarence Ayres and The Instrumental Theory of Value. Journal of Economic Issues, 15 (3): 657–673.
  • Saad, G. (2003). Evolution and Political Marketing. In Human Nature and Public Policy: An Evolutionary Approach, edited by Albert Somit and Steven Peterson, 121-138. London: Palgrave Macmillan.
  • Soral, E. (1974). Özel Kesimde Türk Müteşebbisleri. Ankara: Ankara İktisadi ve Ticari İlimler Akademisi.
  • Sun, G. Z. (2005). Readings in the Economics of the Division of Labor: The Classical Tradition (Vol. 2). World Scientific.
  • Teck-Heang L. & Azham A. (2008). The Evolution Of Auditing: An Analysis Of The Historical Development. Journal Of Modern Accounting And Auditing, 4 (12). Https://Www.Researchgate.Net/Profile/Azham-Md-Ali/Publication/339251518_The_Evolution_Of_Auditing_An_Analysis_Of_The_Historical_Development/Links/5e45ec9f458515072d9a7bfb/The-Evolution-Of-Auditing-An-Analysis-Of-The-Historical-Development.Pdf
  • Tilman, R. (2006). Colin Campbell on Thorstein Veblen on Conspicuous Consumption. Journal of Economic, Issues 40 (1): 97–112.
  • Veblen, T. (1908). ‘On The Nature of Capital. Journal of Economics, 22 (4): 517-42.
  • Veblen, T. (1901). Industrial and Pecuniary Employments. Publications Of The American Economic Association, 3 (2): 190-235.
  • Yenturk, N. (2005). Körlerin Yürüyüşü; Türkiye Ekonomisi ve 1990 Sonrası Krizler. Istanbul:Istanbul Bilgi Universitesi Yayinlari.
There are 41 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Pınar Daloğlu 0000-0002-1456-4603

Emre Balıkcı 0000-0002-5235-2249

Publication Date May 25, 2023
Published in Issue Year 2023 Volume: 7 Issue: 2

Cite

APA Daloğlu, P., & Balıkcı, E. (2023). The Challenge of “Doing Business with Strangers”: Audit Reports as a “Signaling Instrument. Fiscaoeconomia, 7(2), 1239-1258. https://doi.org/10.25295/fsecon.1197653

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