A series of high-profile corporate fraud scandals in the early 2000s have drawn the attention from the public, regulators, and academia. These cases of the high-profile corporate fraud imply that the existing institutions are lack of incentives and monitoring. Therefore, this study aims to investigate the effectiveness of different governance mechanisms in limiting the fraud propensity. Chapter 1 investigates whether monitoring by non-CEO executives can effectively reduce the likelihood of CEOs committing corporate fraud. Controlling for other traditional governance mechanisms, we find that firms with stronger non-CEO executives monitoring have a lower probability of committing fraud. Monitoring by non-CEO executives appears to be a substitute for traditional governance channels, as it is more effective when traditional governance mechanisms are weak. Moreover, we argue that monitoring by non-CEO executives fails to prevent corporate fraud if both CEO and subordinate executives involve in the fraud event. Finally, the strength of such monitoring is larger in more heterogeneous industries, where the human capital of non-CEO executives is less replaceable. Chapter 2 examines the association between employee relation and the firm's incentive of committing fraud. We find that firms treating their employees fairly (as measured by employee relation ratings) have less incentive in committing fraud. Better employee relation facilitates interest alignment between shareholders and the management. Moreover, we find that the CEO duality weaken the negative association between employee relation and the likelihood of fraud commitment. Furthermore, we find that the negative association is more pronounced in R&D-intensive industries, where human capital is more valuable to firm performance. The results are robust to alternative models and measures. Chapter 3 examines the association between corporate political connection and corporate fraud, and its detection, in China for 2003-2009. Using the enforcement action data from the Chinese Securities Regulatory Commission (CSRC), we find that corporate political connection is an important determinant of corporate fraud, while the type of ultimate owner is also relevant. Politically connected firms are 27% less likely to be detected by the CSRC conditional on their fraud commitment. Low detection rate in turn implies that politically connected firms have 23% more probability to commit fraud than non-connected firms. Government controlled firms are 21% less likely to be investigated by the CSRC. However, due to the irrelative tie between firm performance and management team's compensation and promotion, government controlled firms are 12% less likely to commit fraud. Furthermore, we find that our results are mostly driven by the local political connection rather than the central political connection. Finally, our results provide information that can inform policy debates among the regulation policy makers. / Business Administration/Finance
| Identifer | oai:union.ndltd.org:TEMPLE/oai:scholarshare.temple.edu:20.500.12613/3924 |
| Date | January 2013 |
| Creators | Zhang, Jian |
| Contributors | Choi, Jongmoo Jay, 1945-, Anderson, Ronald, Mao, Connie X., Li, Yuanzhi, Feinberg, Susan |
| Publisher | Temple University. Libraries |
| Source Sets | Temple University |
| Language | English |
| Detected Language | English |
| Type | Thesis/Dissertation, Text |
| Format | 160 pages |
| Rights | IN COPYRIGHT- This Rights Statement can be used for an Item that is in copyright. Using this statement implies that the organization making this Item available has determined that the Item is in copyright and either is the rights-holder, has obtained permission from the rights-holder(s) to make their Work(s) available, or makes the Item available under an exception or limitation to copyright (including Fair Use) that entitles it to make the Item available., http://rightsstatements.org/vocab/InC/1.0/ |
| Relation | http://dx.doi.org/10.34944/dspace/3906, Theses and Dissertations |
Page generated in 0.0017 seconds