Career Concerns for Revealing Misreporting

Review of Accounting Studies, Forthcoming

52 Pages Posted: 25 Jun 2016 Last revised: 9 Apr 2021

See all articles by Quinn Curtis

Quinn Curtis

University of Virginia School of Law

Justin Hopkins

University of Virginia - Darden School of Business

Date Written: June 1, 2021

Abstract

We examine whether revealing misreporting affects the careers of executives and independent
directors. To isolate the effects of revealing misreporting from the underlying malfeasance, we
analyze executives and directors who joined firms after stock option backdating ceased, but who
were in place to determine how the firm would respond to the unfolding backdating crisis.
Overall, these new executives and directors faced career penalties at firms that issued a
backdating restatement relative to those at firms that remained silent despite strong evidence of
backdating having occurred. We conduct a variety of tests to rule out alternative explanations,
and conclude that new executives and directors face career penalties after firms reveal
misreporting.

Keywords: corporate governance, executive turnover, board of directors, director labor market, shareholder voting, financial restatements

JEL Classification: G34, J33, M41, M52, K22

Suggested Citation

Curtis, Quinn and Hopkins, Justin, Career Concerns for Revealing Misreporting (June 1, 2021). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2800008 or http://dx.doi.org/10.2139/ssrn.2800008

Quinn Curtis

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

HOME PAGE: http://https://www.law.virginia.edu/faculty/profile/qc3q/2298852

Justin Hopkins (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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