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  • Working Paper

Benchmarking Against the Performance of High Profile 'Scandal' Firms

By: Emre Karaoglu, Tatiana Sandino and Randy Beatty
  • Format:Print
  • | Language:English
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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.
  • SSRN

About The Author

Tatiana Sandino

Accounting and Management
→More Publications

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More from the Authors
  • The Impact of Subunit Culture Consistency on Employee and Customer Outcomes By: Jasmijn Bol, Robert Grasser, Serena Loftus and Tatiana Sandino
  • Buurtzorg By: Ethan Bernstein, Tatiana Sandino, Joost Minnaar and Annelena Lobb
  • From Online Content to Offline Results: Effects of a Best Practices Initiative on an Enterprise Social Network By: Shelley Xin Li and Tatiana Sandino
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