The Effects of Fraud and Lawsuit Revelation on U.S. Executive Turnover and Compensation |
| |
Authors: | Obeua S Persons |
| |
Institution: | (1) Department of Accounting, School of Business Administration, Rider University, 2083 Lawrence Road, Lawrenceville, NJ, 08648, U.S.A. |
| |
Abstract: | This study investigates the impact of fraud/lawsuit revelation on U.S. top executive turnover and compensation. It also examines
potential explanatory variables affecting the executive turnover and compensation among U.S. fraud/lawsuit firms. Four important
findings are documented. First, there was significantly higher executive turnover among U.S. firms with fraud/lawsuit revelation
in the Wall Street Journal than matched firms without such revelation. Second, although on average, U.S. top executives received an increase in cash
compensation after fraud/lawsuit revelation, this increase is smaller than that of matched non-fraud/lawsuit firms. Third,
fraud/lawsuit firms were more likely to change top executive when chief executive officer (CEO) was not the board chairman
and CEO had been on the board for a short time. Fourth, fraud/lawsuit firms were more likely to reduce their executive cash
compensation when profitability was low, firms were involved in fraud, the compensation committee size was small, and the
board met more often. These findings indicate that although, in general, U.S. fraud/lawsuits firms did not reduce their executive
cash compensation, those involved in fraud were more likely to reduce their executive cash compensation than to change their
top executives. The finding, that ethical standards is not a significant factor for U.S. executive turnover nor compensation
reduction, suggests that ethics appears to play no part in the board’s decisions, and that U.S. firms may have ethical standards
in writing but they do not implement nor enforce the standards. |
| |
Keywords: | board of directors corporate governance ethical standards executive compensation executive turnover fraud lawsuit |
本文献已被 SpringerLink 等数据库收录! |
|