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To cheat when continuously missing aspirations: Does CEO experience matter?

Author

Listed:
  • Xi Zhong

    (Guangdong University of Technology)

  • Liuyang Ren

    (Guangdong University of Foreign Studies)

  • Tiebo Song

    (South China University of Technology)

Abstract

Underperformance is seen as an important determinant of firms’ involvement in corporate fraud, but scholars have not reached a consensus on the nature of the relationship between underperformance and corporate fraud to date. In this study, we explore this topic from a new perspective. Specifically, based on performance feedback theory and fraud triangle theory, we explore the impact of the duration of underperformance, rather than the intensity of underperformance, on corporate fraud. Taking 2009–2018 listed firms in China as the research object and using the bivariate probit model for empirical testing, we find that the more a firm underperformed, the higher the likelihood the firm was involved in corporate fraud. In addition, we find that CEOs’ academic experience, overseas work experience and military experience weaken the above relationship by restraining CEO rationalization of corporate fraud.

Suggested Citation

  • Xi Zhong & Liuyang Ren & Tiebo Song, 2023. "To cheat when continuously missing aspirations: Does CEO experience matter?," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 815-845, June.
    • Handle: RePEc:kap:asiapa:v:40:y:2023:i:2:d:10.1007_s10490-022-09805-0
    DOI: 10.1007/s10490-022-09805-0
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