Corporate Board Turnover and Securities Fraud Litigation: Some new evidence from case outcomes
AbstractWe examine the relationship between outcomes of securities fraud class action lawsuits (SFCAs) and corporate board turnover rates. Our results indicate the strength of the allegations in lawsuits affects board turnover. The turnover rates for each type of board member: outsiders, insiders, and CEOs are higher when a lawsuit is settled relative to those that are dismissed. Turnover rates of outside directors are more sensitive to the outcome of the SFCA among firms with higher levels of external blockholdings and those with greater institutional ownership. These results support the view that firms act to impose sanctions on those individuals associated with fraudulent activities.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 664.
Date of creation: 28 Apr 2007
Date of revision: 24 Oct 2009
Note: previously circulated as "Securities Fraud Class Actions and Corporate Governance: New Evidence on the Role of Merit"
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Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Web page: http://fmwww.bc.edu/EC/
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Securities fraud class actions; board turnover; corporate governance;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-19 (All new papers)
- NEP-BEC-2007-05-19 (Business Economics)
- NEP-CFN-2007-05-19 (Corporate Finance)
- NEP-LAW-2007-05-19 (Law & Economics)
- NEP-REG-2007-05-19 (Regulation)
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