Journal article
The consequences of managerial indiscretions: Sex, lies, and firm value
Journal of financial economics, v 127(2), pp 389-415
Feb 2018
Abstract
Personal managerial indiscretions are separate from a firm's business activities but provide information about the manager's integrity. Consequently, they could affect counterparties’ trust in the firm and the firm's value and operations. We find that companies of accused executives experience significant wealth deterioration, reduced operating margins, and lost business partners. Indiscretions are also associated with an increased probability of unrelated shareholder-initiated lawsuits, Department of Justice and Securities and Exchange Commission investigations, and managed earnings. Further, chief executive officers and boards face labor market consequences, including forced turnover, pay cuts, and lower shareholder votes at re-election. Indiscretions occur more often at poorly governed firms where disciplinary turnover is less likely.
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Details
- Title
- The consequences of managerial indiscretions: Sex, lies, and firm value
- Creators
- Brandon N. Cline - Mississippi State UniversityRalph A. Walkling - Drexel UniversityAdam S. Yore - University of Missouri
- Publication Details
- Journal of financial economics, v 127(2), pp 389-415
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000424315500010
- Scopus ID
- 2-s2.0-85044635707
- Other Identifier
- 991019167933504721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics