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CEO accountability for corporate fraud: Evidence from the Split Share Structure Reform in China

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    Rights statement: © Chen, J., Cumming, D., Hou, W., & Lee, E. (2015). CEO accountability for corporate fraud: Evidence from the Split Share Structure Reform in China. Journal of Business Ethics.

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http://ssrn.com/abstract=2389658.
Original languageEnglish
JournalJournal of Business Ethics
DOIs
StateE-pub ahead of print - 25 Nov 2014

Abstract

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.

    Research areas

  • CEO turnover, corporate fraud, ownership, Split Share Structure Reform, China, G30, G38

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