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- Title
Climate for Scandal: Corporate Environments that Contribute to Accounting Fraud.
- Authors
Crutchley, Claire E.; Jensen, Marlin R. H.; Marshall, Beverly B.
- Abstract
We examine the governance characteristics, earnings quality, growth rates, dividend policy, and compensation structure of 97 firms recently under investigation by the Securities and Exchange Commission (SEC) for accounting fraud. Our results show that the corporate environment most likely to lead to an accounting scandal manifests significant growth and accounting practices that are already pushing the envelope of earnings smoothing. Firms operating in this environment seem more likely to tip over the edge into fraud if there are fewer outsiders on the audit committee and outside directors appear overcommitted.
- Subjects
CORPORATE governance; DIVIDENDS; CORPORATE growth; AUDITING of corporations; ACCOUNTING; AUDIT committees; ACCOUNTING fraud; UNITED States. Securities &; Exchange Commission
- Publication
Financial Review, 2007, Vol 42, Issue 1, p53
- ISSN
0732-8516
- Publication type
Article
- DOI
10.1111/j.1540-6288.2007.00161.x