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Do financial markets discipline firms for illegal corporate behaviour?

Author

Listed:
  • Monique ARNOLD

    (Utrecht University, The Netherlands)

  • Peter-Jan ENGELEN

    (Utrecht University, The Netherlands)

Abstract

This paper examines the relationship between the discovery of illegal behaviour by companies on the stock price. It examines whether shareholders care about illegal corporate behaviour and punish companies by driving the stock price down. The empirical results show that stock prices react negatively on the announcement date of corporate malfeasance. We examine different impacts of the type of illegal behaviour, the level of misconduct, the phase and the magnitude.

Suggested Citation

  • Monique ARNOLD & Peter-Jan ENGELEN, 2007. "Do financial markets discipline firms for illegal corporate behaviour?," Management & Marketing, Economic Publishing House, vol. 2(4), Winter.
    • Handle: RePEc:eph:journl:v:2:y:2007:i:4:n:12
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    Citations

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    Cited by:

    1. Del Gaudio, Belinda L. & Salerno, Dario & Sampagnaro, Gabriele & Verdoliva, Vincenzo, 2022. "Misconduct risk in banking services: Does a propensity to be sanctioned exist?," International Review of Financial Analysis, Elsevier, vol. 81(C).
    2. Laure de Batz & Evžen Kočenda & Evžen Kocenda, 2023. "Financial Crime and Punishment: A Meta-Analysis," CESifo Working Paper Series 10528, CESifo.
    3. Mohamad Zeidan, 2013. "Effects of Illegal Behavior on the Financial Performance of US Banking Institutions," Journal of Business Ethics, Springer, vol. 112(2), pages 313-324, January.

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