Publications
Publications
Benchmarking Against the Performance of High Profile 'Scandal' Firms
By: Emre Karaoglu, Tatiana Sandino and Randy Beatty
Abstract
In recent years, several high profile firms engaged in accounting fraud that resulted in severe investor losses and erosion of trust in the capital markets. We examine high profile accounting "scandals" prosecuted by the Securities and Exchange Commission. Unlike most prior literature, we focus on the negative consequences that these "scandal firms" caused on competing firms. We find preliminary evidence that the compensation earned by executives in competing firms decreased as scandal firms performed better via inflated results. We also find that competing firms managed earnings more when their performance was lagging behind the performance of the "scandal firm".
Keywords
Earnings Management; Ethics; Executive Compensation; Performance Evaluation; Financial Services Industry; United States
Citation
Karaoglu, Emre, Tatiana Sandino, and Randy Beatty. "Benchmarking Against the Performance of High Profile 'Scandal' Firms." American Accounting Association Financial Accounting and Reporting Section Paper, July 2006.