Skip to main content
Log in

Fraud characteristics and their effects on shareholder wealth

  • Original Paper
  • Published:
Journal of Business Economics Aims and scope Submit manuscript

Abstract

This study examines characteristics of fraud cases and their effects on shareholder wealth in Germany. Using a sample of 126 fraud cases of listed German firms that became public between 1998 and 2014, we provide evidence that shareholder value decreases significantly in the days surrounding the revelation of a fraud case. Our analysis shows that shareholder wealth losses are remarkable, with a mean (median) loss of 80.78 million euros (47.03 million euros). Further, we find that the characteristics of fraud cases affect the financial consequences to investors. Our results indicate that shareholder wealth decreases more if at least one board member resigns due to the fraud case, but less if firms identify and reject accountable employees. Moreover, shareholder wealth decreases less if firms are willing to cooperate with legal authorities. Exploratory analysis suggests that reputational penalties are considerable for German firms. Our study contributes not only to accounting and corporate governance theory but also to practice in a number of ways. Our results reveal areas that are particularly important for regulators and where effective internal control systems are particularly beneficial. Further, our study identifies critical aspects that firms should consider in their communication with investors when fraud occurs.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

Notes

  1. Sutherland (1945) seminal work uses the term white-collar crime. Other researchers use the term misconduct to denote all types of illegal business behavior (e.g., Murphy et al. 2009; Tibbs et al. 2011). Since the term fraud has become more common in recent years, we refer to white-collar crime with the term fraud throughout the paper.

  2. Karpoff and Lott (1993) also differentiate between four types of fraud. However, the authors do not analyze whether different types of fraud lead to different market reactions.

  3. In line with Alexander (1999), the concept of reputational penalty excludes payments that offending firms have to make to restore their level of reputation prior to the discovery.

  4. In Germany, stock corporations (Aktiengesellschaft) must employ the dualism of a management board (Vorstand) and a separate supervisory board (Aufsichtsrat), which is often called a two-tier system.

  5. We excluded the newspaper Financial Times Deutschland from our analysis because it ceased publication in December 2012 and its press archive is no longer available.

  6. Regarding the coverage of the fraud cases in the media, 13.5 % of the fraud cases were covered in only one of the four newspapers, 23.0 % in two newspapers, and 42.1 % in three newspapers. 21.4 % of the fraud cases were reported in all four newspapers. However, the online archive of Börsenzeitung is only available since 2001. Therefore, the reported percentages are likely to underestimate the coverage in the media slightly.

  7. A short event window is important for measuring reliable abnormal rates of return (Brown and Warner 1985). For instance, McWilliams and Siegel (1997) criticize many event studies for using event windows that are too long to systematically exclude other events.

  8. Using this model results in smaller variances of abnormal returns compared to raw returns, yielding more powerful statistical tests (Beaver 1981).

  9. To assess the induced collinearity, we also computed variance inflation factors, whose maximum was 4.10, well below the critical level of 10.

  10. There are 125 observations for the Fama–French model because Fama–French factors were only available until the end of June 2014, while one fraud case was revealed in September 2014.

  11. Though we have directed hypotheses, we took the conservative approach and refrained from using one-tailed t tests.

  12. We exclude five fraud cases that relate to more than one fraud type. Therefore, the subsample sizes do not add up to our total sample of 126 fraud cases.

  13. A more detailed comparison with prior research fails because prior research generally uses less granular categories.

  14. We also deploy an alternative proxy for media coverage, namely, the number of newspapers that cover a respective fraud case. The results are not affected.

  15. The cases are selected based on their relevance to investors according to the capital market reactions.

  16. Values for non-euro data are converted into euros using the event day.

  17. We acknowledge that in the Hess fraud case, the result can also be interpreted as a valuation correction.

References

  • Abbott LJ, Park Y, Parker S (2000) The effects of audit committee activity and independence on corporate fraud. Manag Financ 26(11):55–68

    Google Scholar 

  • Abbott LJ, Parker S, Peters GF (2004) Audit committee characteristics and restatements. Audit J Pract Theory 23(1):69–87

  • Agrawal A, Jaffe JF, Karpoff JM (1999) Management turnover and governance changes following the revelation of fraud. J Law Econ 42 (Special Issue 1):309–342

  • Alexander CR (1999) On the nature of the reputational penalty for corporate crime: evidence. J Law Econ 42(1):489–526

    Article  Google Scholar 

  • Alexander CR, Cohen MA (1999) Why do corporations become criminals? ownership, hidden actions, and crime as an agency cost. J Corp Financ 5(1):1–34

    Article  MATH  Google Scholar 

  • Arnold U, Neubauer J, Schoenherr T (2012) Explicating factors for companies’ inclination towards corruption in operations and supply chain management: an exploratory study in Germany. Int J Prod Econ 138(1):136–147

    Article  Google Scholar 

  • Ashforth BE, Anand V (2003) The normalization of corruption in organizations. Res Organ Behav 25(1):1–52

    Article  Google Scholar 

  • Association of Certified Fraud Examiners (2014) Report to the nations on occupational fraud and abuse. Available from: http://www.acfe.com/rttn/docs/2014-report-to-nations.pdf. Accessed 2 July 2014

  • Atiase RK (1985) Predisclosure information, firm capitalization, and security price behavior around earnings announcements. J Acc Res 23(1):21–36

    Article  Google Scholar 

  • Ball R (2009) Market and political/regulatory perspectives on the recent accounting scandals. J Acc Res 47(2):277–323

    Article  ADS  Google Scholar 

  • Ball R, Brown P (1968) An empirical evaluation of accounting income numbers. J Acc Res 6(2):159–178

    Article  Google Scholar 

  • Bandura A, Ross D, Ross SA (1963) Vicarious reinforcement and imitative learning. J Abnorm Soc Psychol 67(3):601–607

    Article  CAS  Google Scholar 

  • Beasley MS (1996) An empirical analysis of the relation between the board of director composition and financial statement fraud. Acc Rev 71(4):443–465

    Google Scholar 

  • Beasley MS, Carcello JV, Hermanson DR, Lapides PD (2000) fraudulent financial reporting: consideration of industry traits and corporate governance mechanisms. Acc Horiz 14(4):441–454

    Article  Google Scholar 

  • Beaver WG (1981) Econometric properties of alternative security return methods. J Acc Res 19(1):163–184

    Article  Google Scholar 

  • Becker GS (1968) Crime and punishment: an economic approach. J Polit Econ 76(2):169–217

    Article  Google Scholar 

  • Bell TB, Carcello JV (2000) A decision aid for assessing the likelihood of fraudulent financial reporting. Audit J Pract Theory 9(1):169–178

  • Bowen RM, Call AC, Rajgopal S (2010) Whistle-blowing: target firm characteristics and economic consequences. Acc Rev 85(4):1239–1271

    Article  Google Scholar 

  • Brennan NM, McGrath M (2007) Financial statement fraud: some lessons from us and european case studies. Aust Acc Rev 17(2):49–61

    Article  Google Scholar 

  • Breton G, Taffler RJ (2001) Accounting information and analyst stock recommendation decisions: a content analysis approach. Acc Bus Res 31(2):91–101

    Article  Google Scholar 

  • Brown N, Deegan C (1998) The public disclosure of environmental performance information—a dual test of media agenda setting theory and legitimacy theory. Acc Bus Res 29(1):21–41

    Article  Google Scholar 

  • Brown SK, Warner JB (1985) Using daily stock returns: the case of event studies. J Financ Econ 14(1):3–31

    Article  Google Scholar 

  • Brown N, Pott C, Wömpener A (2014) The effect of internal control and risk management regulation on earnings quality: evidence from Germany. J Acc Public Policy 63(1):1–33

    Article  Google Scholar 

  • Brückner R, Lehmann P, Schmidt MH, Stehle R (2015) Fama/French factors for germany: which set is best? Working Paper, Humboldt University of Berlin

  • Buschkin I (2005) The viability of class action lawsuits in a globalized economy—permitting foreign claimants to be members of class action lawsuits in the U.S. federal courts. Cornell Law Rev 90(6):1563–1600

    Google Scholar 

  • Bussmann KD, Krieg O, Nestler C, Salvenmoser S, Schroth A, Thelle A, Trunk D (2009) Wirtschaftskriminalität 2009: Sicherheitslage in deutschen Großunternehmen. PricewaterhouseCoopers, Martin-Luther-Universität Halle-Wittenberg

  • Bussmann K-D, Nestler C, Salvenmoser S (2013) Wirtschaftskriminalität und Unternehmenskultur 2013. PricewaterhouseCoopers, Martin-Luther-Universität Halle-Wittenberg

  • Caplan D (1999) Internal controls and the detection of management fraud. J Acc Res 37(1):101–117

    Article  Google Scholar 

  • Carhart M (1997) On persistence in mutual fund performance. J Financ 52(1):57–82

    Article  Google Scholar 

  • Chakravarthy J, deHaan E, Rajgopal S (2014) reputation repair after a serious restatement. Acc Rev 89(4):1329–1363

    Article  Google Scholar 

  • Chan K, Kleinman G, Lee P (2009) The Impact of Sarbanes-Oxley on internal control remediation. Int J Acc Inf Manag 17(1):53–65

    Article  Google Scholar 

  • Chen G, Firth M, Gao DM, Rui OM (2006) Ownership structure, corporate governance, and fraud: evidence from China. J Corp Financ 12(3):424–448

    Article  Google Scholar 

  • Coffee JC (2005) A theory of corporate scandals: why the USA and Europe differ. Oxf Rev Econ Policy 21(2):198–211

    Article  Google Scholar 

  • Cohen J, Ding Y, Lesage C, Stolowy H (2010) Corporate fraud and managers’ behavior: evidence from the press. J Bus Ethics 95(2):271–315

    Article  Google Scholar 

  • Combe E, Monnier C (2011) Fines against hard core cartels in Europe: the myth of overenforcement. Antitrust Bull 56(2):235–275

    Article  Google Scholar 

  • Core JE, Holthausen RW, Larcker DF (1999) Corporate governance, chief executive officer compensation, and firm performance. J Financ Econ 51(3):371–406

    Article  Google Scholar 

  • Corrado CJ (1989) A nonparametric test for abnormal security-price performance in event studies. J Financ Econ 23(2):385–395

    Article  Google Scholar 

  • Davidson WN, Worrell DL (1988) The impact of announcements of corporate illegalities on shareholder returns. Acad Manag J 31(1):195–200

    Article  Google Scholar 

  • Davis JH, Schoorman FD, Donaldson L (1997) Toward a stewardship theory of management. Acad Manag Rev 22(1):20–47

    Google Scholar 

  • Dechow PM, Sloan RG, Sweeney AP (1996) Causes and consequences of earnings manipulation: an analysis of firms subject to enforcement actions by the SEC. Contemp Acc Res 13(1):1–36

    Article  Google Scholar 

  • Denis DJ, Hanouna P, Sarin A (2006) Is there a dark side to incentive compensation? J Corp Financ 12(3):467–488

    Article  Google Scholar 

  • Doyle J, Ge W, McVay S (2007) Determinants of weaknesses in internal control over financial reporting. J Acc Econ 44(1):193–223

    Article  Google Scholar 

  • Dyck A, Morse A, Zingales L (2010) Who blows the whistle on corporate fraud? J Financ 65(6):2213–2253

    Article  Google Scholar 

  • Dyck A, Morse A, Zingales L (2013) How pervasive is corporate fraud? Working paper, University of Toronto, Toronto

  • Ehrgott M, Reimann F, Kaufmann L, Carter CR (2011) Social sustainability in selecting emerging economy suppliers. J Bus Ethics 98(1):99–119

    Article  Google Scholar 

  • Erickson M, Hanlon M, Maydew E (2006) Is there a link between executive equity incentives and accounting fraud? J Acc Res 44(1):113–143

    Article  Google Scholar 

  • Ertugrul M, Krishnan K (2011) Can CEO dismissal be proactive? J Corp Financ 17(1):134–151

    Article  Google Scholar 

  • EY, 2014. Overcoming compliance fatigue: reinforcing the commitment to ethical growth. Available from: http://www.ey.com/Publication/vwLUAssets/EY-13th-Global-Fraud-Survey/$FILE/EY-13th-Global-Fraud-Survey.pdf. Accessed 29 Oct 2014

  • Fama E, French K (1993) Common risk factors in the returns of stocks and bonds. J Financ Econ 33:3–56

    Article  MATH  Google Scholar 

  • Fama E, Fisher L, Jensen MC, Roll RW (1969) The adjustment of stock prices to new information. Int Econ Rev 10(1):1–21

    Article  Google Scholar 

  • Farber DB (2005) Restoring trust after fraud: does corporate governance matter? Acc Rev 80(2):539–561

    Article  Google Scholar 

  • Ghoul S, Guedhami O, Kwok CCY, Mishra DR (2011) Does corporate social responsibility affect the cost of capital? J Bank Financ 35(9):2388–2406

    Article  Google Scholar 

  • Gompers PA (1996) grandstanding in the venture capital industry. J Financ Econ 42(1):133–156

    Article  Google Scholar 

  • Griffin JM, Shu T, Topaloglu S (2012) Examining the dark side of financial markets: do institutions trade on information from investment bank connections? Rev Financ Stud 25(7):2155–2188

    Article  Google Scholar 

  • Hammersley JS, Myers LA, Shakespeare C (2008) Market reactions to the disclosure of internal control weaknesses and to the characteristics of those weaknesses under section 302 of the Sarbanes-Oxley Act of 2002. Rev Acc Stud 13(1):141–165

    Article  Google Scholar 

  • Hennes KM, Leone AJ, Miller BP (2008) The importance of distinguishing errors from irregularities in restatement research: the case of restatements and CEO/CFO turnover. Acc Rev 83(6):1487–1519

    Article  Google Scholar 

  • Hoffman VB, Zimbelman MF (2009) Do strategic reasoning and brainstorming help auditors change their standard audit procedures in response to fraud risk? Acc Rev 84(3):811–837

    Article  Google Scholar 

  • Hofmann C (2013) A legal analysis of the euro zone crisis. Fordham J Corp Financ Law 18(3):552–562

    Google Scholar 

  • Hoitash U, Hoitash R, Bedard JC (2009) Corporate Governance and internal control over financial reporting: a comparison of regulatory regimes. Acc Rev 84(3):839–867

    Article  Google Scholar 

  • Holmes SA, Langford M, Welch OJ, Welch ST (2002) Associations between internal controls and organizational citizenships behavior. J Manag Issues 14(1):85–99

    Google Scholar 

  • Johnson SA, Ryan HE, Tian YS (2009) Managerial incentives and corporate fraud: the sources of incentives matter. Rev Financ 13(1):115–145

    Article  MATH  Google Scholar 

  • Kang E (2008) Director interlocks and spillover effects of reputational penalties from financial reporting fraud. Acad Manag J 51(3):537–555

    Article  Google Scholar 

  • Kang H, Cheng M, Gray SJ (2007) Corporate governance and board composition: diversity and independence of australian boards. Corp Gov Int Rev 15(2):194–207

    Article  Google Scholar 

  • Karpoff JM (2012) Reputation and the invisible hand: a review of empirical research, Working Paper, University of Washington

  • Karpoff JM, Lott JR (1993) The reputational penalty firms bear from committing criminal fraud. J Law Econ 36(2):757–802

    Article  Google Scholar 

  • Karpoff JM, Lou X (2010) Short sellers and financial misconduct. J Financ 65(4):1879–1913

    Article  Google Scholar 

  • Karpoff JM, Lee S, Martin GS (2008a) The cost to firms of cooking the books. J Financ Quant Anal 43(3):581–612

    Article  Google Scholar 

  • Karpoff JM, Lee S, Martin GS (2008b) The consequences to managers for financial misrepresentation. J Financ Econ 88(2):193–215

    Article  Google Scholar 

  • Kerl A, Schürg C, Walter A (2014) The impact of financial times deutschland news on stock prices—post announcement drifts and inattention of investors. Fin Mark Portfolio Manag 28(4):409–436

    Article  Google Scholar 

  • Kinney WR (2000) research opportunities in internal control quality and quality assurance. Audit J Pract Theory 19(Supplement):83–90

  • Klein B, Leffer KB (1981) The role of market forces in assuring contractual performance. J Polit Econ 89(4):615–641

    Article  Google Scholar 

  • Knoeber C (1986) Golden parachutes, shark repellents and hostile tender offers. Am Econ Rev 76(1):155–167

    Google Scholar 

  • Kothari SP, Warner JB (2006) Econometrics of event studies. In: Eckbo BE (ed) Handbook of corporate finance: empirical corporate finance, vol A. North-Holland, Elsevier

    Google Scholar 

  • Liekweg A (2014) Fraud vermeiden durch Controlling und Interne Revision. Control Manag Rev 58(5):20–27

    Article  Google Scholar 

  • Livingston JG (1997) Management-borne costs of fraudulent and misleading financial reports. Dissertation, University of Rochester

  • Maksimovic V, Titman S (1991) Financial policy and reputation for product quality. Rev Financ Stud 4(1):175–200

    Article  Google Scholar 

  • Marciukaityte D, Szewczyk SH, Uzun H, Varma R (2006) Governance and performance changes after accusations of corporate fraud. Financ Anal J 62(3):32–41

    Article  Google Scholar 

  • Martin GS, Resick CJ, Keating MA, Dickson MW (2009) Ethical leadership across cultures: a comparative analysis of German and US perspectives. Bus Ethics Eur Rev 18(2):127–144

    Article  Google Scholar 

  • Masli A, Peters GF, Richardson VJ, Sanchez JM (2010) Examining the potential benefits of internal control monitoring technology. Acc Rev 85(3):1001–1034

    Article  Google Scholar 

  • McCabe DL, Treviño LK, Butterfield KD (1996) The influence of collegiate and corporate codes of conduct on ethics-related behavior in the workplace. Bus Ethics Q 6(4):461–476

    Article  Google Scholar 

  • McCarthy B, Hagan J (2001) When crime pays: capital, competence, and criminal success. Soc Forces 79(3):1035–1060

    Article  Google Scholar 

  • McWilliams A, Siegel D (1997) Event studies in management research: theoretical and empirical issues. Acad Manag J 40(3):626–657

    Article  Google Scholar 

  • Miller GS (2006) The press as a watchdog for accounting fraud. J Acc Res 44(5):1001–1033

    Article  ADS  Google Scholar 

  • Mitchell TR, Daniels D, Hopper H, George-Falvy J, Ferris GR (1996) Perceived correlates of illegal behavior in organizations. J Bus Ethics 15(4):439–455

    Article  Google Scholar 

  • Molander EA, Brenner SN (1977) Is the ethics of business changing? Harvard Bus Rev 55(1):57–71

    Google Scholar 

  • Murphy DL, Shrieves RE, Tibbs SL (2009) Understanding the penalties associated with corporate misconduct: an empirical examination of earnings and risk. J Financ Quant Anal 44(1):55–83

    Article  Google Scholar 

  • Palmrose ZV, Richardson VJ, Scholz S (2004) Determinants of market reactions to restatement announcements. J Acc Econ 37(1):59–89

    Article  Google Scholar 

  • Parker LD (2007) Financial and external accounting research: the broadening corporate governance challenge. Acc Bus Res 37(1):39–54

    Article  ADS  Google Scholar 

  • Patterson ER, Smith JR (2007) The effects of Sarbanes-Oxley on auditing and internal control strength. Acc Rev 82(2):427–455

    Article  Google Scholar 

  • Peltier-Rivest D, Lanoue N (2012) Thieves from within: occupational fraud in Canada. J Financ Crime 19(1):54–64

    Article  Google Scholar 

  • Pinto J, Leana CR, Pil FK (2008) Corrupt organizations or organizations of corrupt individuals. Acad Manag Rev 33(3):685–709

    Article  Google Scholar 

  • Posner BZ, Schmidt WH (1984) Values and the American manager. An Update. Calif Manag Rev 26(3):202–216

    Article  Google Scholar 

  • Rao SM (1997) The effect of announcement of bribery, scandal, white collar crime, and illegal payment on returns to shareholders. J Financ Strateg Decisions 10(3):55–62

    Google Scholar 

  • Rao SM, Hamilton JB (1996) The effect of published reports of unethical conduct on stock prices. J Bus Ethics 15(12):1321–1339

    Article  Google Scholar 

  • Rappaport A (1999) Creating shareholder value: the new standard for business performance. Free Press, New York

    Google Scholar 

  • Reichert AK, Lockett M, Rao RP (1996) The impact of illegal business practice on shareholder returns. Financ Rev 31(1):67–85

    Article  Google Scholar 

  • Rezaee Z (2005) Causes, consequences, and deterrence of financial statement fraud. Crit Perspect Acc 16(3):277–298

    Article  Google Scholar 

  • Sanders WMG, Carpenter MA (1998) Internationalization and firm governance: the roles of CEO compensation, top team composition, and board structure. Acad Manag J 41(2):158–178

    Article  Google Scholar 

  • Schnatterly K (2003) Increasing firm value through detection and prevention of white-collar crime. Strateg Manag J 24(7):587–614

    Article  Google Scholar 

  • Schwartz MS, Dunfee TW, Kline MJ (2005) Tone s? J Bus Ethicsat the top: an ethics code for director 58(1–3):79–100

    Article  Google Scholar 

  • Shadnam M, Lawrence TB (2011) Understanding widespread misconduct in organizations: an institutional theory of moral collapse. Bus Ethics Q 21(3):379–407

    Article  Google Scholar 

  • Shapiro C (1983) Premiums for high quality products as returns to reputations. Quart J Econ 98(4):659–680

    Article  Google Scholar 

  • Sharma VD (2004) Board of director characteristics, institutional ownership, and fraud: evidence from Australia. Audit J Pract Theory 23(2):105–117

  • Smith NC, Simpson SS, Huang CY (2007) Why managers fail to do the right thing: an empirical study of unethical and illegal conduct. Bus Ethics Q 17(4):633–667

    Article  Google Scholar 

  • Soltani B (2014) The anatomy of corporate fraud: a comparative analysis of high profile American and european corporate scandals. J Bus Ethics 120(2):251–274

    Article  Google Scholar 

  • Srinivasan S (2005) Consequences of Financial reporting failure for outside directors: evidence from accounting restatements and audit committee members. J Acc Res 43(2):291–334

    Article  Google Scholar 

  • Sutherland EW (1945) Is “White Collar Crime” Crime? Am Sociol Rev 10(2):132–139

    Article  Google Scholar 

  • Sutherland EW (1983) White Collar Crime. Yale University Press, New Haven

    Google Scholar 

  • Sweeney B, Pierce B, Arnold DF Sr (2013) The impact of perceived ethical intensity on audit-quality-threatening behaviors. Acc Bus Res 43(2):112–137

    Article  Google Scholar 

  • Tanimura JK, Okamoto MH (2013) Reputational penalties in Japan: evidence from Corporate Scandals. Asian Econ J 27(1):39–57

    Article  Google Scholar 

  • Tibbs SL, Harrell DL, Shrieves RE (2011) Do shareholders benefit from corporate misconduct? a long-run analysis. J Empir Legal Stud 8(3):449–476

    Article  Google Scholar 

  • Tremblay P (1993) Searching for suitable co-offenders. In: Clarke R, Elson M (eds) Routine activity and rational choice. Transaction, Edison

    Google Scholar 

  • Tremblay P, Morselli C (2000) Patterns in criminal achievement: Wilson and Abrahamse revisited. Criminology 38(2):633–657

    Article  Google Scholar 

  • Treviño LK (1986) Ethical decision making in organizations: a person-situation interactionist model. Acad Manag Rev 11(3):601–617

    Google Scholar 

  • Treviño LK, Nelson KA (2004) Managing business ethics: straight talk about how to do it right. Wiley, New York

    Google Scholar 

  • Treviño LK, Weaver GR, Gibson DG, Toffler BL (1999) Managing ethics and legal compliance: what works and what hurts. Calif Manag Rev 41(2):131–151

    Article  Google Scholar 

  • Uzun H, Szewczyk SH, Varma R (2004) Board composition and corporate fraud. Financ Anal J 60(3):33–43

    Article  Google Scholar 

  • Velikonja U (2011) Leverage, sanctions, and deterrence of accounting fraud. UC Davis Law Rev 44(4):1281–1345

    Google Scholar 

  • Walsh JP, Seward JK (1990) On the efficiency of internal and external corporate control mechanisms. Acad Manag Rev 15(3):421–458

    Google Scholar 

  • Walters RH, Leat M, Mezei L (1963) Inhibition and disinhibition of responses through empathetic learning. Can J Psychol 17(2):235–243

    CAS  PubMed  Google Scholar 

  • Walters RH, Parke RD, Cane VA (1965) Timing of punishment and the observation of consequences to others as determinants of response inhibition. J Exp Child Psychol 2(1):10–30

    Article  Google Scholar 

  • Wang TY, Winton A, Yu X (2010) Corporate fraud and business conditions: evidence from IPOs. J Financ 65(6):2255–2292

    Article  Google Scholar 

  • Weisbach M (1988) Outside directors and CEO turnover. J Financ Econ 20(4):431–460

    Article  Google Scholar 

  • Willmer MAP (1977) A mathematical approach to complex fraud problems. Acc Bus Res 26(7):120–123

    Article  Google Scholar 

  • Xie B, Davidson WN, DaDalt PJ (2003) Earnings management and corporate governance: the role of the board and the audit committee. J Corp Financ 9(3):295–316

    Article  Google Scholar 

  • Yeoh P (2012) The UK Bribery Act 2010: contents and implications. J Financ Crime 19(1):37–53

    Article  Google Scholar 

  • Young SM, Peng EY (2013) An analysis of accounting frauds and the timing of analyst coverage decisions and recommendation revisions: evidence from the US. J Bus Financ Acc 40(3–4):399–437

    Article  Google Scholar 

  • Zahra SA, Priem RL, Rasheed AA (2005) The antecedents and consequences of top management fraud. J Manag 31(6):803–828

    Google Scholar 

  • Zahra SA, Priem RL, Rasheed AA (2007) Understanding the causes and effects of top management fraud. Org Dyn 36(2):122–139

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Corinna Ewelt-Knauer.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Ewelt-Knauer, C., Knauer, T. & Lachmann, M. Fraud characteristics and their effects on shareholder wealth. J Bus Econ 85, 1011–1047 (2015). https://doi.org/10.1007/s11573-015-0773-5

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11573-015-0773-5

Keywords

JEL Classification

Navigation