From the abstract:
"Managerial indiscretions such as arrests, fabrications, and extramarital affairs are personal to the executive and separate from the business activities of the firm. We examine whether disclosure of these personal indiscretions are related to changes in firm value and subsequent malfeasance. Companies of accused executives experience significant short- and long-term wealth losses, reduced operating performance, and an increased probability of shareholder-initiated lawsuits, DOJ/SEC investigations, and managed earnings. Approximately sixty-five percent of accused CEOs retain their positions even among repeat offenders. Indiscretions are more likely in poorly governed firms where disciplinary turnover is also less likely."
The complete paper may be downloaded here.
All the best,
Ralph
P.S. Our friend Wes Gray runs a terrific blog called Alpha Architect. Wes also recently posted about our paper. Check out his site!
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