Powerful CEOs and Corporate Governance: Evidence from an Analysis of CEO and Director Turnover After Fraud

초록

In this paper, we investigate the consequences of fraud for CEOs and whether these consequences depend on CEO power. We find that CEO power can reduce the likelihood of director turnover as well as CEO turnover after fraud detection. Further, we find that CEO power is negatively related to long-term stock performance after fraud detection and this negative relationship is particularly strong for powerful CEOs when the board has a low overall turnover. These results imply that powerful CEOs can entrench themselves and survive corporate turbulence by potentially working with board members who are favorable to them.

키워드