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2025-04-01 01:44本頁(yè)面
【正文】 ffense as the event date due to the following reasons: previous events may have a residual carryover effect。 financial statements.We hypothesize that AAER firms are more likely to be financially distressed and that they more frequently turn to fraudulent accounting practices in an attempt to meet earning expectations. Only after accounting fraud is detected by the SEC does it have a severe impact on the firm. The occurrence of SEC investigation generally signals poor accounting quality to investors, and stock prices can quickly reflect this negatively. A large amount of accounting error indicates that the firm value is overstated, casting doubt about the accuracy of previous financial statements. We hypothesize that boards of directors are more likely to replace management teams due to the following reasons: to recover reputation loss, to guarantee an unbiased SEC investigation, or to satisfy the anxious investors.Agrawal, Jaffe and Karpoff (1999) study firms suspected or charged with fraud during 19811992. Their study includes the following types of fraud: fraud against shareholders, fraud against government, financial reporting fraud and regulatory violations. They do not find systematic evidence of unusually high turnover among senior managers and directors. Even for financial fraud firms, they do not find higher top management and director turnover rates than control firms. Their findings are rather surprising since accounting fraud signals lower firm value and large fraud could be detrimental to shareholders’ interests. Retention of the old management team is not conducive to a smooth investigation by the SEC and may result in significant reputation losses. In this paper we extend turnover analysis to three levels: total management turnover (. Chairman, CEO, President, CFO, Treasurer and Controller), top management turnover (. Chairman, CEO, President) and financial management turnover (. CFO, Treasurer and Controller) over a longer event window (2, 2).Denis amp。 management position.On July 30, 2002, President Bush signed into law the SarbanesOxley Act. This is considered to be one of the most sweeping revisions of the federal securities laws in the past 60 years. It creates a significant, new oversight and regulatory regime over the public accounting industry, imposes many important reforms in corporate governance and disclosure requirements, and dramatically increases criminal penalties for white collar crime. One of the most substantive reforms in the act is that . and foreign reporting panies have to provide CEO and CFO certifications with their SEC filings that contain financial statements. Academia has been debating how effective the act is at preventing executives from mitting accounting fraud. Opponents argue that the act will not have the desired effect because existing market mechanisms are already in place to regulate executive behavior. If the accounting fraud is likely to cause management turnover, one can argue that market mechanism is already playing a critical role in disciplining errant management. Thus the disciplining effects of the SarbanesOxley Act could be less than desired.The passing of the SarbanesOxley Act was a direct consequence of two major incidents outlined in the following two paragraphs:In October 2001, Enron, the energy giant, announced that its earnings were overstated by $ billion. Less than two weeks later it fired Andrew Fastow, its Chief Financial Officer, claiming that he allegedly arranged deceptive and failing hidden in the financial statements, Enron was already billions of dollars in debt as a result of fraudulent accounting, illegal loans, and partnerships. Early in December of 2001, it was forced to file for bankruptcy. Top management turnover in that year signaled the instability of Enron. Jeffrey Skilling took over as CEO for former CEO Kenneth Lay in February 2001. Mr. Skilling resigned in August after a brief sixmonth tenure, claiming the move to be for personal reasons.On June 25, 2002, MCI WorldCom, the second largest longdistance pany in the ., disclosed a $ billion accounting error in the previous five quarters. This became the largest accounting fraud case in history. On the same day it fired its longtime Chief Financial Officer, Scott Sullivan. Coincidentally, on April 29, two months earlier, its board forced its former CEO, Bernard Ebbers, to resign. The actual dollar value of WorldCom fraud has been increasing ever since: it topped $7 billion by August 2002 and rose to $11 billion by March 2003.**What impact does accounting fraud have on the turnover of panies39。 top management turnover is significantly related to the SEC enforcement action after controlling for firmspecific characteristics.I. Introduction Within the past two years investors have been plagued by numerous instances of fraud and scandal in corporate America. Financial scandals reduce investors39。 Market for“l(fā)emons”：Qualitative Uncertainty and the MarketMechanism[
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