Repeated Engagement in Misconduct by Executives Involved With Financial Restatements

Organizational Behavior & Human Decision Processes, Forthcoming

Posted: 31 Jul 2020

See all articles by Poonam Khanna

Poonam Khanna

University of Texas at San Antonio, Department of Management

Sarfraz Khan

University of Louisiana at Lafayette

Dina Krasikova

affiliation not provided to SSRN

Stewart R. Miller

University of Texas at San Antonio - Department of Management

Date Written: July 2, 2020

Abstract

Recidivism, or repeated engagement in misconduct despite severe consequences, among top executives has received limited attention in the literature on organizational misconduct. Based on insights from fairness theory, supplemented by insights from attribution theory, we argue that the likelihood of an executive recidivating is associated with the perceived fairness of the sanctions he/she faces following the initial misconduct. We examine an effect of a common managerial labor market sanction – lower compensation – on the likelihood of recidivism. Using a sample of Chief Financial Officers (CFOs) who left their positions following financial misconduct at their firms and subsequently migrated to another public firm in the same capacity, we test and find support for our prediction. A number of robustness and endogeneity tests add support to our recidivism model.

Suggested Citation

Khanna, Poonam and Khan, Sarfraz and Krasikova, Dina and Miller, Stewart R., Repeated Engagement in Misconduct by Executives Involved With Financial Restatements (July 2, 2020). Organizational Behavior & Human Decision Processes, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3641805

Poonam Khanna (Contact Author)

University of Texas at San Antonio, Department of Management ( email )

United States

Sarfraz Khan

University of Louisiana at Lafayette ( email )

Department of Accounting
214 Hebrard Blvd.
Lafayette, LA 70508
United States

Dina Krasikova

affiliation not provided to SSRN

Stewart R. Miller

University of Texas at San Antonio - Department of Management ( email )

501 W. Durango
San Antonio, TX 78207
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
606
PlumX Metrics