This study aims to provide new evidence linking internal corporate governance mechanisms and corporate misconduct, using a sample of 2,844 public US companies during the period 2007-2019. The results reveal that optimal size and diverse boards, including well-functioning audit com- mittees, are negatively related to corporate violations. In contrast, we show that board mem- bers’ independence, activity, and ownership are positively related to a rm’s fraudulent activities. Therefore, not all internal governance mechanisms are related to lower corporate misconduct. Moreover, we show that some internal governance mechanisms, such as the share of female board members, mitigate only certain types of corporate misconduct. The results show that attempts to regulate corporate governance mechanisms should be considered with caution as they do not always provide the expected outcome
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More about this item
Keywords
: corporate misconduct; internal governance mechanisms; board of directors; committees; ownership;All these keywords.
JEL classification:
- G01 - Financial Economics - - General - - - Financial Crises
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
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