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Suspect CEOs, unethical culture, and corporate misbehavior

Listed author(s):
  • Biggerstaff, Lee
  • Cicero, David C.
  • Puckett, Andy
Registered author(s):

    We show that firms with Chief Executive Officers (CEOs) who personally benefit from options backdating are more likely to engage in other corporate misbehaviors, suggestive of an unethical corporate culture. These firms are more likely to commit financial fraud to overstate earnings. They acquire more private companies, which could perpetuate their frauds, and their acquisitions are met with lower market responses. These misbehaviors are concentrated in firms with externally hired suspect CEOs, consistent with outside CEOs having greater discretion to shape firm culture. The costs of these misbehaviors are reflected in larger stock price declines during a market correction and increased CEO replacement.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0304405X14002608
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    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 117 (2015)
    Issue (Month): 1 ()
    Pages: 98-121

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    Handle: RePEc:eee:jfinec:v:117:y:2015:i:1:p:98-121
    DOI: 10.1016/j.jfineco.2014.12.001
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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