Smokescreen: How Managers Behave When They Have Something To Hide / Tanja Artiga González, Markus Schmid, David Yermack.

Format:

Book

Author/Creator:

González, Tanja Artiga.

Contributor:

National Bureau of Economic Research.

Schmid, Markus.

Yermack, David.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18886.

NBER working paper series no. w18886

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2013.

Summary:

We study financial reporting and corporate governance in 218 companies accused of price fixing. These firms engage in evasive financial reporting strategies, including earnings smoothing, segment reclassification, and restatements. In corporate governance, cartel firms favor outside directors likely to monitor inattentively due to low attendance, other board seats, and overseas residence. When directors resign, they are often not replaced, and auditors are rarely switched. Cartel firms have unusually low CEO turnover and rely on internal management promotions. Their managers exercise stock options faster than managers of other firms. Cartel firms are large donors to political candidates. While our results are based only upon firms engaged in price fixing, we expect that they should apply generally to all companies in which managers seek to conceal poor performance or wrongdoing.

Notes:

Print version record

March 2013.