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Corporate fraud culture: Re-examining the corporate governance and performance relation

Journal Article


Abstract


  • We analyse the corporate governance and performance relation, when conditioning on corporate fraud, for fraud firms during 2000 – 2007. Fraud firms are identified as either self- reported fraud events, or subject to regulatory investigation. We use the inverse Mills ratio procedure to account for firms’ (unobservable) fraud culture in the dynamic system GMM model of the performance- governance relation. We find that corporate governance is an endogenously determined characteristic that has no causal impact on firm performance when conditioning on fraud. Fraud is a significant regulatory event but its overall economic impact at the firm level is highly variable.

Authors


  •   Tan, David T.
  •   Chapple, Larelle (external author)
  •   Walsh, Kathleen (external author)

Publication Date


  • 2017

Citation


  • Tan, D. T., Chapple, L. & Walsh, K. D. (2017). Corporate fraud culture: Re-examining the corporate governance and performance relation. Accounting and Finance, 57 (2), 597-620.

Number Of Pages


  • 23

Start Page


  • 597

End Page


  • 620

Volume


  • 57

Issue


  • 2

Place Of Publication


  • Australia

Abstract


  • We analyse the corporate governance and performance relation, when conditioning on corporate fraud, for fraud firms during 2000 – 2007. Fraud firms are identified as either self- reported fraud events, or subject to regulatory investigation. We use the inverse Mills ratio procedure to account for firms’ (unobservable) fraud culture in the dynamic system GMM model of the performance- governance relation. We find that corporate governance is an endogenously determined characteristic that has no causal impact on firm performance when conditioning on fraud. Fraud is a significant regulatory event but its overall economic impact at the firm level is highly variable.

Authors


  •   Tan, David T.
  •   Chapple, Larelle (external author)
  •   Walsh, Kathleen (external author)

Publication Date


  • 2017

Citation


  • Tan, D. T., Chapple, L. & Walsh, K. D. (2017). Corporate fraud culture: Re-examining the corporate governance and performance relation. Accounting and Finance, 57 (2), 597-620.

Number Of Pages


  • 23

Start Page


  • 597

End Page


  • 620

Volume


  • 57

Issue


  • 2

Place Of Publication


  • Australia