Whistle Blowing, Forced CEO Turnover and Misconduct: The Role of Socially Minded Employees and Directors

Management Science, forthcoming

48 Pages Posted: 22 Dec 2013 Last revised: 14 Oct 2018

See all articles by Frederick L. Bereskin

Frederick L. Bereskin

University of Missouri

Terry L. Campbell

University of Delaware - Department of Finance

Simi Kedia

Rutgers Business School

Date Written: October 2, 2018

Abstract

We examine the response of prosocial employees and boards of directors to corporate misconduct. We develop several proxies for the presence of prosocial employees and directors, based on the density of social networks and social capital in the county of the firms’ headquarters and companies’ relevant Corporate Social Responsibility ratings. We document that proxies for prosocial employees and directors are associated with an increase in whistle blowing and forced CEO turnover in a sample of firms that engage in misconduct. The higher expected cost of misconduct in firms with prosocial employees is associated with a lower likelihood of misconduct. Our findings highlight the role of non-financial imperatives of employees and directors in mitigating misconduct.

JEL Classification: G30, G34

Suggested Citation

Bereskin, Frederick L. and Campbell, Terry Lee and Kedia, Simi, Whistle Blowing, Forced CEO Turnover and Misconduct: The Role of Socially Minded Employees and Directors (October 2, 2018). Management Science, forthcoming. Available at SSRN: https://ssrn.com/abstract=2370482 or http://dx.doi.org/10.2139/ssrn.2370482

Frederick L. Bereskin (Contact Author)

University of Missouri ( email )

Columbia, MO 65203
United States

Terry Lee Campbell

University of Delaware - Department of Finance ( email )

College of Business and Economics
Newark, DE 19716
United States

Simi Kedia

Rutgers Business School ( email )

117 Levin
94 Rockafellar Road
Piscataway, NJ
United States
8484454195 (Phone)

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