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| Author: | Karpoff, J.M. Lee, D.S. Martin, G.S. |
| Title: | The consequences to managers for financial misrepresentation |
| Journal: | Journal of Financial Economics
2008 : MAY, VOL. 88:2, p. 193-215 |
| Index terms: | management turnover finance fraud regulations USA |
| Language: | eng |
| Abstract: | This paper tracks the fortunes of more than 2,200 individuals identified as responsible parties for more than 780 Securities and Exchange Commission (SEC) and Department of Justice (DOJ) enforcement actions for financial misrepresentation from Jan. 1978 to Sep. 2006. There are firings and/or other job losses for 93 percent by the end of the regulatory enforcement period. The likelihood of sidelining increases with the cost of the misconduct to shareholders and the quality of the firm's governance. Guilty managers bear substantial financial losses through restrictions on their future employment, their shareholdings in the firm etc. A minority (28 percent) face criminal charges and penalties, incl. imprisonment. According to these results, the individuals of financial misconduct face significant disciplinary action. |
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