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Securities fraud and corporate board turnover: New evidence from lawsuit outcomes

Author

Listed:
  • Baum, Christopher F.
  • Bohn, James G.
  • Chakraborty, Atreya

Abstract

We examine the relationship between outcomes of securities fraud class action lawsuits (SFCAs) and corporate board turnover rates. Our results indicate that turnover rates for board members are higher when a firm settles a lawsuit than when a suit is dismissed. Outside director turnover is most sensitive to SFCA outcomes, perhaps reflecting reputational effects. Results demonstrate that involvement in securities fraud is costly for corporate board members.

Suggested Citation

  • Baum, Christopher F. & Bohn, James G. & Chakraborty, Atreya, 2016. "Securities fraud and corporate board turnover: New evidence from lawsuit outcomes," International Review of Law and Economics, Elsevier, vol. 48(C), pages 14-25.
  • Handle: RePEc:eee:irlaec:v:48:y:2016:i:c:p:14-25
    DOI: 10.1016/j.irle.2016.07.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate governance; Securities law; Securities fraud; Board turnover;

    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

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