The consequences of managerial indiscretions: Sex, lies, and firm value

• 成果类型: Article
• 署名作者: Cline, Brandon N.; Walkling, Ralph A.; Yore, Adam S.
• 署名单位: Mississippi State University; Drexel University; University of Missouri System; University of Missouri Columbia
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.11.008
• 发表日期: 2018
• 页码: 389-415
• 关键词: Managerial indiscretions; Management quality; integrity; Class action lawsuits; FRAUD; earnings management; corporate governance; Managerial labor markets; Director elections; ceo turnover; Poor monitoring index

摘要

Personal managerial indiscretions are separate from a firm's business activities but provide information about the manager's integrity. Consequently, they could affect counter parties' trust in the firm and the firm's value and operations. We find that companies of accused executives experience significant wealth deterioration, reduced operating margins, and lost business partners. Indiscretions are also associated with an increased probability of unrelated shareholder-initiated lawsuits, Department of Justice and Securities and Exchange Commission investigations, and managed earnings. Further, chief executive officers and boards face labor market consequences, including forced turnover, pay cuts, and lower shareholder votes at re-election. Indiscretions occur more often at poorly governed firms where disciplinary turnover is less likely. (C) 2017 Elsevier B.V. All rights reserved.