In Search of Responsible CEOS: The Case of CEOS with Non-Profit Experience
January 26, 2011
We advance, and test, two competing hypotheses that relate prior non-profit experience to fraud and/or negligence against the null of no relationship, and find that available evidence supports the Accountability Hypothesis. This hypothesis posits that the bureaucratic and chaotic culture of many non-profits often attracts and/or molds individuals with subpar managerial habits, and therefore non-profit experience should be positively related to fraud and/or negligence. We find that firms headed by CEOs with non-profit experience are more likely to restate financial statements than other firms, even after controlling for variables that have been shown to affect restatements, and that the returns around announcements of class action securities litigation are more negative for firms with “non-profit” CEOs.
Number of Pages in PDF File: 34
Keywords: CEO characteristics, CEO experience, fraud, negligence, corporate governance
JEL Classification: G34, M51working papers series
Date posted: December 22, 2009 ; Last revised: March 30, 2011
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