Abstract

https://ssrn.com/abstract=2285785
 
 

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Suspect CEOs, Unethical Culture, and Corporate Misbehavior


Lee Biggerstaff


Miami University of Ohio - Department of Finance

David C. Cicero


Harbert College of Business, Auburn University; University of Alabama - Culverhouse College of Commerce & Business Administration

Andy Puckett


University of Tennessee, Knoxville

November 1, 2014

Journal of Financial Economics (JFE), Forthcoming

Abstract:     
We show that firms with CEOs who personally benefit from options backdating are more likely to engage in other corporate misbehaviors, suggestive of an unethical corporate culture. These firms are more likely to commit financial fraud to overstate earnings. They acquire more private companies, which could perpetuate their frauds, and their acquisitions are met with lower market responses. These misbehaviors are concentrated in firms with externally-hired suspect CEOs, consistent with outside CEOs having greater discretion to shape firm culture. The costs of these misbehaviors are reflected in larger stock price declines during a market correction and increased CEO replacement.

Number of Pages in PDF File: 66

Keywords: Corporate Culture, Ethics, Fraud, CEO, Option Backdating

JEL Classification: G30, G32, G39


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Date posted: June 27, 2013 ; Last revised: November 8, 2014

Suggested Citation

Biggerstaff, Lee and Cicero, David C. and Puckett, Andy, Suspect CEOs, Unethical Culture, and Corporate Misbehavior (November 1, 2014). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2285785 or http://dx.doi.org/10.2139/ssrn.2285785

Contact Information

Lee Biggerstaff
Miami University of Ohio - Department of Finance ( email )
Oxford, OH 45056
United States
David C. Cicero
Harbert College of Business, Auburn University ( email )
415 Magnolia Ave.
Auburn, AL 36849
United States
University of Alabama - Culverhouse College of Commerce & Business Administration ( email )
Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
Andy Puckett (Contact Author)
University of Tennessee, Knoxville ( email )
437 Stokely Managment Center
Knoxville, TN 37996
United States
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