Journal of Business Ethics

, Volume 138, Issue 4, pp 787–806 | Cite as

CEO Accountability for Corporate Fraud: Evidence from the Split Share Structure Reform in China

  • Jiandong Chen
  • Douglas Cumming
  • Wenxuan HouEmail author
  • Edward Lee


We use institutional-related theories and a unique natural experiment that enables an exogenous test of the influence of controlling shareholders on managerial accountability to corporate fraud. In China, prior to the Split Share Structure Reform (SSSR), state shareholders held restricted shares that could not be traded. This restriction mitigated state-owned enterprise controlling shareholders’ incentives to monitor managers. The data examined show the SSSR strengthens incentives of state-owned enterprise controlling shareholders to replace fraudulent management. Our findings support the view that economic incentives are important to promote corporate governance and deter fraud.


CEO turnover Corporate fraud Ownership Split Share Structure Reform China 


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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Jiandong Chen
    • 1
  • Douglas Cumming
    • 2
  • Wenxuan Hou
    • 3
    Email author
  • Edward Lee
    • 4
  1. 1.School of Public Finance and EconomicsSouthwestern University of Finance and EconomicsChengduPeople’s Republic of China
  2. 2.Schulich School of BusinessYork UniversityTorontoCanada
  3. 3.University of Edinburgh Business SchoolEdinburghUK
  4. 4.Manchester Business SchoolUniversity of Manchester Crawford HouseManchesterUK

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