Abstract

http://ssrn.com/abstract=2112569
 
 

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Database Challenges in Financial Misconduct Research


Jonathan M. Karpoff


University of Washington - Michael G. Foster School of Business

Allison Koester


Georgetown University

D. Scott Lee


University of Nevada, Las Vegas - Lee Business School

Gerald S. Martin


American University - Kogod School of Business

March 5, 2014

Georgetown McDonough School of Business Research Paper No. 2012-15

Abstract:     
Financial misconduct is revealed to investors through a complex sequence of information events. We hand-collect data for 1,099 SEC enforcement cases to examine biases in four popular databases used in financial misconduct research. We find that initial public announcements of financial misconduct occur months before coverage in these databases. These databases omit most relevant announcements because they collect just one type of event or miss events they purportedly capture; most events they do capture are unrelated to financial fraud. Event studies and firm characteristic comparisons show that these database features can lead to economically meaningful biases in corporate finance research.

Number of Pages in PDF File: 66

Keywords: Financial misconduct, restatement, class action lawsuit, Securities and Exchange Commission

JEL Classification: G38; K22; K42; M41

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Date posted: July 19, 2012 ; Last revised: March 8, 2014

Suggested Citation

Karpoff, Jonathan M. and Koester, Allison and Lee, D. Scott and Martin, Gerald S., Database Challenges in Financial Misconduct Research (March 5, 2014). Georgetown McDonough School of Business Research Paper No. 2012-15. Available at SSRN: http://ssrn.com/abstract=2112569 or http://dx.doi.org/10.2139/ssrn.2112569

Contact Information

Jonathan M. Karpoff (Contact Author)
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
206-685-4954 (Phone)
206-221-6856 (Fax)
Allison Koester
Georgetown University ( email )
McDonough School of Business
Washington, DC 20057
United States
202.687.6461 (Phone)
HOME PAGE: http://explore.georgetown.edu/people/apk29/

D. Scott Lee
University of Nevada, Las Vegas - Lee Business School ( email )
4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States
702-895-2526 (Phone)
702-895-4630 (Fax)
HOME PAGE: http://faculty.unlv.edu/slee
Gerald S. Martin
American University - Kogod School of Business ( email )
Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-3914 (Phone)
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