Abstract

http://ssrn.com/abstract=2112569
 
 

References (47)



 
 

Citations (7)



 


 



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

May 30, 2014

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

Abstract:     
More than 150 research papers that examine the causes and effects of financial misconduct compile samples use one of four popular databases. We use a hand-collected sample of 1,099 cases identified by the SEC for financial misrepresentation to document, calibrate, and measure the importance of four features in each of these four databases that pose challenges for researchers. First, the initial public revelations of financial misconduct occur months before the initial coverage in these databases. Second, these databases collect just one type of event, so they omit other relevant announcements that affect a researcher’s use of the events. Third, most of the events captured by these databases are unrelated to financial fraud. Fourth, the databases miss large numbers of events they were designed to capture. Event study tests and comparisons of firm characteristics show that these four database features can lead to economically meaningful biases in many applications. We show which database is most susceptible to each potential challenge, and propose remedies for researchers seeking to use these four databases.

Number of Pages in PDF File: 65

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

JEL Classification: G38; K22; K42; M41

working papers series





Download This Paper

Date posted: July 19, 2012 ; Last revised: June 12, 2014

Suggested Citation

Karpoff, Jonathan M. and Koester, Allison and Lee, D. Scott and Martin, Gerald S., Database Challenges in Financial Misconduct Research (May 30, 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)
Feedback to SSRN


Paper statistics
Abstract Views: 3,365
Downloads: 869
Download Rank: 14,132
References:  47
Citations:  7

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.406 seconds