CONVERGENCE OF LAWS AND ITS LIMITS: A CASE STUDY OF TURKISH AND EU LAWS ON AUDITING

Classifications on the world’s legal systems have long been the subject to studies in comparative law. The modern comparative approach however, no longer relies solely on the classic categorisation of commoncivil law countries. This general classification fails to consider that legal systems can change through time and not all areas of law share the same patterns. For instance, firms (and countries) adopt international rules and standards voluntarily. This kind of convergence can mostly appear in the field of commercial law, including the field of auditing where the effect of economic integration of markets is in place. In this respect, in order to be a part of the global economy and to attract foreign direct investment, Turkey reformed its commercial law and capital markets law. In addition, there are political forces for convergence such as the EU requirement for Turkey to adopt EU laws. This paper critically investigates the forces for convergence and questions to what extent the laws on auditing are converging between EU and Turkey. It concludes that despite the formal convergence, actual convergence has not been achieved fully and differences still persist due to the institutional disparities.

HUKUKTA YAKINSAMA VE SINIRLARI: TÜRK VE AB BAĞIMSIZ DENETİM YASALARININ ÖRNEK OLAY İNCELEMESİİ

Dünya’da hukuk sistemlerindeki sınıflandırmalar karşılaştırmalı hukuk alanındaki çalışmalara uzun zamandan beri konu olmuştur. Bununla birlikte, modern karşılaştırmalı yaklaşım, artık sadece AngloSakson ve Kıta Avrupası Hukuk sistemleri klasik sınıflandırmasına dayanmamaktadır. Bu genel sınıflandırma, yasal sistemlerin zaman içinde değişebileceğini ve hukukun bütün alanlarının aynı kalıpları paylaşmadığını dikkate almaz. Örneğin, şirketler (ve devletler) gönüllü olarak uluslararası kural ve standartları benimseyebilirler. Bu tür bir yakınsama, piyasaların ekonomik entegrasyonunun etkisinin olduğu bağımsız denetim alanı da dahil olmak üzere çoğunlukla ticaret hukuku alanında ortaya çıkabilir. Bu bağlamda, küresel ekonominin bir parçası olmak ve doğrudan yabancı yatırımları çekmek için Türkiye ticaret kanununu ve sermaye piyasası kanununu yeniden düzenledi. Ayrıca, Türkiye’nin AB mevzuatını benimsemesi gerekliği gibi politik güçlerden de bahsedilebilir. Bu makale, yakınsama kuvvetlerini eleştirel bir şekilde incelemekte ve bağımsız denetim yasaları açısından AB ile Türkiye arasında ne derece yakınsama olduğunu sorgulamaktadır. Makalede, resmi yakınsamaya rağmen, gerçek anlamda bir yakınsamaya tam olarak ulaşılamadığı ve kurumsal uyumsuzluklar nedeniyle farklılıkların görüldüğü sonucuna varılmıştır.

PDF

___

Armour, J. (2005) ‘Who Should Make Corporate Law? EC Legislation versus Regulatory Competition’ Current Legal Problems, 58: pp. 369-413.

Ashbaugh, H. & Watfield, T. D. (2012) ‘Audit as a Corporate Governance Mechanism: Evidence from the German Market’ Journal of International Accounting Research, 2: pp. 1-21.

Atiyas, I. (2012) ‘Economic Institutions and Economic Change in Turkey during the Neoliberal Era’ New Perspectives on Turkey, 14: pp. 45-69.

Baç, M. M. (2005) ‘Turkey’s Political Reforms and the Impact of the European Union’ South European Society and Politics Journal, 10: pp. 17- 31.

Baldwin, R. & Cave, M. (2012) Understanding Regulation Theory, Strategy, and Practice, 2nd edition, Oxford University Press.

Ball, R. (2001) ‘Infrastructure Requirements for an Economically Efficient System of Public Financial Reporting and Disclosure’ BrookingsWharton Papers on Financial Services, pp. 127-169.

Bebchuk, L. A. & Roe, M. J. (1999) ‘A Theory of Path Dependence in Corporate Ownership and Governance’ Stanford Law Review, 52: pp. 127- 170.

Berkowitz, D., Pistor, K., & Richard, J. (2003a) ‘The Transplant Effect’ The Journal of Comparative Law, 51:1, pp. 163-203 (Berkowitz et al., 2003a).

Berkowitz, D., Pistor, K., & Richard, J. (2003b) ‘Economic Development, Legality, and the Transplant Effect’ 47 European Economic Review, 47: pp. 165-195 (Berkowitz et al., 2003b).

Black, L. S. Jr., (2012) ‘Why Corporations Choose Delaware’ Delaware Department of State Division of Corporations, https://corpfiles.delaware.gov/whycorporations_web.pdf accessed 29 March, 2019.

Cabrelli, D. & Siems, M. (2015) ‘Convergence, Legal Origins, and Transplants in Comparative Corporate Law: A Case-Based and Quantitative Analysis’ American Journal of Comparative Law, 63: pp. 109-153.

Coffee, J. C. Jr., (1999) ‘The Future as History: The Prospects for Global Convergence in Corporate Governance and Its Implications’ Northwestern University Law Review, 93:3, pp. 641-707 (Coffee, 1999).

Coffee, J. C. Jr., (2000) ‘Do Norms Matter? A Cross-Country Evaluation’ University of Pennsylvania Law Review, 149:6, pp. 2151-2177 (Coffee, 2000).

Coffee, J. C. Jr., (2005) ‘A Theory of Corporate Scandals: Why the USA and Europe Differ’ Oxford Review of Economic Policy, 21:2, pp. 198- 211.

Copley, P., Gavier, J., & Gaver, M. (1995) ‘Simultaneous Estimation of the Supply Demand of Differentiated Audits: Evidence from the Municipal Audit Market’ Journal of Accounting Research, 33:1, pp. 137-155.

Easterbrook, F. H. & Fischel, D. R. (1991) The Economic Structure of Corporate Law, Harvard University Press.

Engert, S. (2010) EU Enlargement and Socialization Turkey and Cyprus, Routledge, New York.

Fan, J. P. H. & Wong, T. J. (2005) ‘Do External Auditors Perform a Corporate Governance Role in Emerging Markets? Evidence from East Asia’ Journal of Accounting Research, 43:1, pp. 35-72.

Francis, J. R., Khurana I. K., & Pereira, R. (2003) ‘The Role of Accounting and Auditing in Corporate Governance and The Development of Financial Markets Around the World’ Asia-Pacific Journal of Accounting and Economics, 10: pp. 1-30.

Geiger, U. (1997) ‘The Case for the Harmonization of Securities Disclosure Rules in the Global Market’ Columbia Business Law Review, pp. 241- 318.

Gilson, R. J. (2006) ‘Controlling Shareholders and Corporate Governance: Complicating the Comparative Taxonomy’ Harvard Law Review, 119:6, pp. 1641- 1679.

Gray, S. J. (1988) ‘Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally’ Abacus, 24: pp. 1-15.

Guedhami, O. & Pittman, J. A. (2000) ‘Ownership Concentration in Privatized Firms: The Role of Disclosure Standards, Auditor Choice, and Auditing Infrastructure’ Journal of Accounting Research, 44:5, pp. 889-929.

Hansmann, H. & Kraakman, R. (2001) ‘The End of History for Corporate Law’ Georgetown Law Journal, 89: pp. 436-468.

Hellman, N., Gray, S. J., Morris, R. D. & Haller, A. (2015) ‘The Persistence of International Accounting Differences as Measured on Transition to IFRS’ Accounting and Business Research, 45:2, pp. 166-195.

Hoecke, M. & Warrington, M. (1998) ‘Legal Cultures and Legal Paradigms: Towards a New Model for Comparative Law ’International and Comparative Law Quarterly, 47: pp. 495-536.

Hofstede, G. (1980) Culture’s Consequences, Sage.

Hope, O. K. et al., (2008) ‘Culture and Auditor Choice: A Test of the Secrecy Hypothesis’ Journal of Accounting and Public Policy, 27: pp. 357- 373.

Husa, J. (2011) ‘The Method is Dead. Long Live the Methods! European Polynomia and Pluralist Methodology’ Legisprudence 5:3, pp. 249-271.

Jensen, M. C. & Meckling, W. H. (1976) ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ Journal of Financial Economics, 3:4, pp. 305-360.

Johnson, W. B. & Lys, T. (1990) ‘The Market for Audit Services: Evidence from Voluntary Auditor Changes’ Journal of Accounting and Economics, 12:1-3, pp. 281-308.

Kraakman, R., Armour, J., Davies, P., Enriques, L., Hansmann, H. B., Hertig, G., Hopt, K. J., Kanda, H., & Rock, E. B. (2009) The Anatomy of Corporate Law: A Comparative and Functional Approach, 2nd edition, Oxford, Oxford University Press.

La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (1999) ‘Corporate Ownership around the World’ Journal of Finance, 54:2, pp. 471-517 (La Porta et al, 1999).

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1997), ‘Legal Determinants of External Finance’ Journal of Finance 52:3, pp. 1131- 1150. (La Porta et al, 1997).

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1998) ‘Law and Finance’ Journal of Political Economy, 106:6, pp. 1113-1155. (La Porta et al, 1998).

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (2000) ‘Investor Protection and Corporate Governance’ Journal of Financial Economics, 58: pp. 3-27. (La Porta et al, 2000).

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (2002) ‘Investor Protection and Corporate Valuation’ Journal of Finance, 57: pp. 1147-1170.

Lele, P. P. & Siems, M. M. (2007) ‘Shareholder Protection: A Leximetric Approach’ Journal of Corporate Law Studies, 7: pp. 17-50.

Licht, A. N. (1998) ‘Regulatory Arbitrage for Real: International Securities Regulation in A World Interacting Securities Markets’ Virginia Journal of International Law, 38: pp. 563-638.

Lindahl, F. & Schadéwitz, H. (2013) ‘Are Legal Families Related to Financial Reporting Quality’ Abacus, 49:2, pp. 242-267.

Nobes, C. W. (2011) ‘IFRS Practices and the Persistence of Accounting System Classification’ Abacus, 47:3, pp. 267–283.

Ogus, A., ‘The Economic Approach: Competition between Legal Systems’: Örücü, E. & Nelken, D. (Editors) (2007) Comparative Law: A Handbook, Hart.

Omurgonulsen, M. & Omurgonulsen, U. (2009) ‘Critical Thinking about Creative Accounting in the Face of a Recent Scandal in the Turkish Banking Sector’ Critical Perspectives on Accounting, 20: pp. 651-673.

Onis, Z. & Kutluay, M. (2013) ‘Rising Powers in a Changing Global Order: The Political Economy of Turkey in the Age of BRICS’ The Third World Quarterly, 34:8, pp. 1409-1426.

Örücü, E. ‘Family Trees for Legal Systems: Towards a Contemporary Approach’: Van Hoecke, M. (Editor) (2004) Epistemology and Methodology of Comparative Law, Oxford, Hart.

Örücü, E. ‘A General View of “Legal Families” and of “Mixing Systems”’: Örücü E. & Nelken, D. (Editors) (2007) Comparative Law: A Handbook, Hart (Örücü, 2007).

Örücü, E. (2000) ‘Turkey Facing the European Union- Old and New Harmonies’ European Law Review, 25:5, pp. 523-537.

Ozel, I. & Atiyas, I. ‘Regulatory Diffusion in Turkey: A Cross-Sectoral Assessment’: Cetin, T. & Oguz, F. (Editors) (2011) The Political Economy of Regulation in Turkey, New York, Springer.

Ozel, I. (2012) ‘The Politics of De-delegation: Regulatory (In)dependence in Turkey’ 6 Regulation and Governance, 6: pp. 119-129.

Pistor, K., Raiser, M., & Gelfer, S. (2000) ‘Law and Finance in Transition Economies’ Economic of Transition, 8:2, pp. 325-368.

Rasheed, A. A. & Yoshikawa, T., ‘The Convergence of Corporate Governance: Promise and Prospects’: Rasheed, A. A. & Yoshikawa, T. (Editors) (2012) The Convergence of Corporate Governance, Palgrave Macmillan.

René, D. & Brierley, J. E. C. (1985) Major Legal Systems in The World Today: An Introduction to The Comparative Study of Law, London, Stevens.

Shapiro, S. P. (1987) ‘The Social Control of Impersonal Trust’ American Journal of Sociology, 93:3, pp. 623-658.

Siems, M. (2008) Convergence in Shareholder Law, Cambridge University Press (Siems, 2008).

Siems, M. (2014) Comparative Law, Cambridge University Press (Siems, 2014).

Uzay, S. & Tanç, A, & Erciyes, M. ‘Financial Auditing in Turkey: Historical Context and Expectations’, 12th World Congress of Accounting Historians, July 20-24, 2008.

Watts, R. L. & Zimmerman, J. L. (1983) ‘Agency Problems, Auditing, and the Theory of the Firm: Some Evidence’ Journal of Law and Economics, 26:3, pp. 613-633.

White, L. J. ‘Competition versus Harmonization-An Overview of International Regulation of Financial Services’: Barfield, C. E. (Editor) (1996) International Financial Markets: Harmonization versus Competition, AEI Press.

Yoshikawa, T. & Rasheed, A. A. (2009) ‘Convergence of Corporate Governance: Critical Review and Future Directions’ Corporate Governance: An International Review, 17:3, pp. 388-404.

Yurtoğlu, B. B. (2000) ‘Ownership, Control and Performance of Turkish Listed Firms’ Empirica, 27: pp. 193-222.