Corporate Board Turnover and Securities Fraud Litigation: Some new evidence from case outcomes
We 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.
|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"|
|Contact details of provider:|| Postal: |
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