Providing CEOs With Opportunities to Cheat

What motivates CEOs to misreport financial results?

Hermann Achidi Ndofor of Texas A&M University, Curtis Wesley of Indiana University, and Richard L. Priem of Texas Christian University and LUISS Guido Carli University published “Providing CEOs With Opportunities to Cheat: The Effects of Complexity-Based Information Asymmetries on Financial Reporting Fraud” in the Journal of Management’s OnlineFirst section. The abstract:

Untitled
JOM_v38_72ppiRGB_150pixW

Opportunities for financial reporting fraud arise because of information asymmetries—often labeled “lack of transparency”—between top managers and their diverse shareholders. We evaluate the relative contributions of information asymmetries arising from industry-level and firm-level complexities to the likelihood of top managers committing financial reporting fraud. Using a sample of 453 matched pairs of firms that have and have not been identified as having committed financial reporting fraud, we found that information asymmetries arising from industry- and firm-level complexities increase the likelihood of financial fraud. Moreover, more CEO stock options increase the likelihood of fraud when industry complexity is high, while aggressive monitoring by the audit committee reduces the likelihood of reporting fraud when firm-level complexity is high.

Click here to read more, and follow this link if you’d like to receive email updates from the Journal of Management, which is is committed to publishing scholarly empirical and theoretical research articles that have a high impact on the management field as a whole.

0 0 votes
Article Rating

Business & Management INK

Business and Management INK puts the spotlight on research published in our more than 100 management and business journals. We feature an inside view of the research that’s being published in top-tier SAGE journals by the authors themselves.

Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x