University of Minnesota
Carlson School of Management
321 - 19th Avenue South
Minneapolis, MN 55455
NBER Working Papers and Publications
|April 2012||Executives' "Off-The-Job" Behavior, Corporate Culture, and Financial Reporting Risk|
with Robert Davidson, Abbie J. Smith: w18001
We examine how executives' behavior outside the workplace, as measured by their ownership of luxury goods (low "frugality") and prior legal infractions, is related to financial reporting risk. We predict and find that CEOs and CFOs with a legal record are more likely to perpetrate fraud. In contrast, we do not find a relation between executives' frugality and the propensity to perpetrate fraud. However, as predicted, we find that unfrugal CEOs oversee a relatively loose control environment characterized by relatively high probabilities of other insiders perpetrating fraud and unintentional material reporting errors. Further, cultural changes associated with an increase in fraud risk are more likely during unfrugal (vs. frugal) CEOs' reign, including the appointment of an unfrugal CFO, an i...
Published: Robert Davidson & Aiyesha Dey & Abbie Smith, 2015. "Executives' “off-the-job” behavior, corporate culture, and financial reporting risk," Journal of Financial Economics, vol 117(1), pages 5-28.
|December 2011||Executives' "Off-The-Job" Behavior, Corporate Culture, and Financial Reporting Risk|
with Robert Davidson, Abbie Smith
in Causes and Consequences of Corporate Culture, Luigi Zingales and James Poterba, organizers