Financial fraud, director reputation, and shareholder wealth

• 成果类型: Article
• 署名作者: Fich, Eliezer M.; Shivdasani, Anil
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; Drexel University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2006.05.012
• 发表日期: 2007
• 页码: 306-336
• 关键词: director reputation; financial fraud; interlocking directorships; Class action lawsuits

摘要

We investigate the reputational impact of financial fraud for outside directors based on a sample of firms facing shareholder class action lawsuits. Following a financial fraud lawsuit, outside directors do not face abnormal turnover on the board of the sued firm but experience a significant decline in other board seats held. This decline in other directorships is greater for more severe allegations of fraud and when the outside director bears greater responsibility for monitoring fraud. Interlocked firms that share directors with the sued firm also exhibit valuation declines at the lawsuit filing. Fraud-affiliated directors are more likely to lose directorships at firms with stronger corporate,governance and their departure is associated with valuation increases for these firms. (c) 2007 Elsevier B.V. All rights reserved.