Who Did it Matters: Executive Equity Compensation and Financial Reporting Fraud

Robert H. DavidsonPamplin School of Business, Virginia Polytechnic Institute and State University Abstract In within-firm analysis of 1,805 executives, executives implicated in financial reporting fraud cases have significantly stronger equity incentives than their within-firm peers who are not implicated in the fraud. Executives implicated in fraud cases also have significantly stronger equity incentives...

The Deterrent Effect of Insider Trading Enforcement Actions

Robert H DavidsonPamplin School of Business, Virginia Polytechnic Institute and State University Christo PirinskyUniversity of Central Florida Abstract We analyze whether exposure to an SEC insider trading enforcement action affects how insiderstrade. We find that following an insider trading enforcement action at one firm, exposed insidersearn significantly lower abnormal profits from their trades at...

Financial Reporting Fraud and Delegated Investment

Robert H DavidsonPamplin School of Business, Virginia Polytechnic Institute and State University Christo PirinskyUniversity of Central Florida Hanjiang ZhangWashington State University Abstract Following the public revelation of financial reporting fraud against a company in their portfolio, professional money managers decrease (increase) their holdings in stocks with high (low) expected...

Attitudes towards Noncompliance and the Demand for External Financing

Robert H Davidson Pamplin School of Business, Virginia Polytechnic Institute and State University Christo Pirinsky United States Securities and Exchange Commission Abstract We study the link between individual propensity to violate moral principles and demand for finance based on two datasets – the World Values Survey and a dataset with the legal records of CEOs of U.S. publicly traded companies. We find that...

Executive Equity Compensation and Financial Statement Fraud

Robert H Davidson Pamplin School of Business, Virginia Polytechnic Institute and State University February 2017 Abstract I find the association between equity compensation and financial statement fraud is positive and significant for executives named as perpetrators of fraud by the SEC. The results hold in intra-firm analyses of over 1,500 executives at over 350 fraud firms comparing named and unnamed executives in...