I study how the decisions of corporate individuals, firm culture, corporate behavior, and the broader financial markets are interconnected. In the first chapter, I examine insider trade reporting violations by corporate insiders, such as executives, officers, and directors, who have access to nonpublic information. The Sarbanes-Oxley Act of 2002 (SOX) mandates prompt insider trade reporting within two business days to reduce information asymmetry. However, frequent violations of this deadline breach securities law and may indicate a broader culture of noncompliance. I investigate whether insiders’ adherence to or disregard for filing deadlines reflects the firm’s stance on unethical behavior and its fiduciary duty to shareholders. Using a dataset of 18,567 firm-year observations post-SOX, I find a significant positive association between insider filing violations and future corporate misconduct, especially in firms without a Chief Compliance Officer (CCO). This suggests that strong internal regulatory systems are crucial for promoting a culture of compliance. In the second chapter, I explore the link between incoming CEO incentives and real earnings management (REM), which involves purposeful deviations from normal business operations to meet specific earnings targets. New CEOs face significant scrutiny from shareholders, boards, and the market, which may pressure them to manage earnings. I find a negative association between CEO risk-taking incentives (vega) and REM and a positive association between CEO stock price sensitivity (delta) and REM when the firm is in financial distress. These findings suggest that CEO incentives are closely related to REM. In the third chapter, using hand-collected data, I explore the labor market response to executives’ off-the-job personal misconduct, such as sexual misadventure, substance abuse, violence, and dishonesty. I observe that executives with a record of indiscretion are 12% more likely to switch firms, 11% more likely to lose board seats, and 10% more likely to experience a lower rank the next year. Furthermore, they are 34.5% to 37.3% more likely to join firms with low integrity culture scores. This research highlights the career repercussions of personal indiscretions for executives.

Corporate social responsibility has attracted broad attention of scholars and practitioners over the past decades. However, organizations are at the same time frequently exposed for acts of corporate misconduct, accompanied by media coverage, public disapproval and financial penalties. This master thesis attempts to connect these two concepts by explaining changes in corporate social responsibility as a consequence of preceding irresponsibility. Based on a sample of misconduct events that were disclosed and penalized in the United States between 2010 and 2017, this work focusses on two factors that are argued to stimulate higher CSR performance. First, it is reasoned that the height of imposed financial penalties from governmental agencies leads to more responsible practices, as their unmediated effect sensitizes managers to increase measures against transgressive behavior, which aims to prevent reoccurrence and further penalties in the future. Second, the misconduct causes damage to stakeholders and thereby impairs the overall corporate reputation. Since firms are dependent on stakeholder goodwill, they will consequently increase their CSR performance to repair the reputational losses. Results from empirical data analyses confirm the positive effect of reputational damage, but give no support to the hypothesized impact of legal penalties on CSR enhancement. When assessing the effect of both factors on the subsequent behavior of the respective parent organizations, mixed and non-significant results indicate that there is no negative legitimacy spillover within the intrafirm network. The findings provide valuable implications for managers and promising directions for future research.

近年來知名公司面臨起訴或遭到定罪的消息層出不窮，然而在公司定罪的相關研究中，多數文獻著重於探究遭受定罪之事實對公司價值的影響，較少研究聚焦於定罪事實對公司所參與之聯貸案契約條件的影響，有鑑於此，本篇文章旨在探討犯罪公司於定罪前後其聯貸借款條件之借款利率是否有顯著差異。本篇研究發現事件前後犯罪公司之借款利率差異並不顯著。當我們試以修正資料庫登錄與犯罪新聞時間差的問題後，結果顯示犯罪公司之借款利率於犯罪相關新聞發布後顯著上升，除此之外，考量交乘作用後發現犯罪公司間，犯罪罪刑為詐欺類以及受判罰金較高的犯罪公司於事件後，相較於其他犯罪公司，該類公司更傾向面臨較高的借貸成本。 / A number of well-known corporate prosecutions have been raised in recent years. Previous literature focuses more on the valuation impact of corporate convictions. Empirical evidence on how corporate convictions affect the contract terms of syndicated loan is sparse. We examine how corporate misconducts affect the pricing of bank debt after corporate convictions. We find that the difference of loan spreads between facilities initiated before and after conviction are insignificant. Taking potential lag of initial announcement time into consideration, we find significant evidence that the effect of corporate conviction is positively associated with the increases of loan spreads. Moreover, interaction terms with conviction variable show that firms with large fines or convicted of fraud-related crimes tend to face higher loan spread after convictions.