Access the full text.
Sign up today, get DeepDyve free for 14 days.
Klein Klein (2002)
“Audit Committee, Board of Director Characteristics, and Earnings Management.”Journal of Accounting and Economics, 33
Douglas Skinner (1997)
Earnings Disclosures and Stockholder LawsuitsChicago Booth ARC: Financial Accounting (Topic)
April Klein (2002)
Audit Committee, Board of Director Characteristics, and Earnings ManagementSEIN Corporate Governance & Accountability eJournal
L. Bebchuk, John IV, Guhan Subramanian (2002)
The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence and PolicyNBER Working Paper Series
D. Yermack, Anil Shivdasani (1998)
CEO Involvement in the Selection of New Board Members: An Empirical AnalysisNYU Law & Economics Research Paper Series
D. Larcker, Scott Richardson (2003)
Corporate Governance, Fees for Non-Audit Services and Accrual ChoicesAuditing
(2003)
Standards Relating to Listed Company Audit Committees
Felton Felton, Berryman Berryman, Stephenson Stephenson (2004)
“A New Era in Corporate Governance.”McKinsey Quarterly, 2
Bebchuk Bebchuk, Coates Coates, Subramanian Subramanian (2002)
“The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence and Policy.”Stanford Law Review, 54
E. Fama, M. Jensen (1983)
Separation of Ownership and ControlThe Journal of Law and Economics, 26
Anup Agrawal, J. Jaffe, Jonathan Karpoff (1999)
Management Turnover and Governance Changes Following the Revelation of Fraud*The Journal of Law and Economics, 42
S. Kaplan, D. Reishus (1990)
Outside directorships and corporate performanceJournal of Financial Economics, 27
J. Coles, Chun Hoi (2003)
New Evidence on the Market for Directors: Board Membership and Pennsylvania Senate Bill 1310Journal of Finance, 58
L. Bebchuk, Alma Cohen (2004)
The Costs of Entrenched BoardsLSN: Corporate Law (Topic)
(2003)
Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments
R. Bowen, Shivaram Rajgopal, M. Venkatachalam (2004)
Accounting Discretion, Corporate Governance, and Firm Performance*Contemporary Accounting Research, 25
Zoe-Vonna Palmrose, Susan Scholz (2004)
The Circumstances and Legal Consequences of Non‐GAAP Reporting: Evidence from Restatements*Contemporary Accounting Research, 21
P. Hribar, N. Jenkins (2003)
The Effect of Accounting Restatements on Earnings Revisions and the Estimated Cost of CapitalReview of Accounting Studies, 9
(2002)
Financial Statement Restatements: Trends, Market Impacts, Regulatory Responses, and Remaining Challenges
James Booth, D. Deli (1996)
Factors affecting the number of outside directorships held by CEOsJournal of Financial Economics, 40
Jeffrey Callen, J. Livnat, D. Segal (2005)
Accounting Restatements, 15
(2002)
Evaluating Financial Reporting Quality
Zoe-Vonna Palmrose, V. Richardson, Susan Scholz (2001)
Determinants of Market Reactions to Restatement AnnouncementsCapital Markets: Market Efficiency eJournal
Joseph Carcello, T. Neal (2000)
Audit Committee Composition and Auditor ReportingAuditing
Benjamin Hermalin, M. Weisbach (1988)
The Determinants of Board CompositionThe RAND Journal of Economics, 19
(2003)
Auditor Independence and NonAudit Services: What do Restatements Suggest?
N. Vafeas (1999)
Board meeting frequency and firm performanceJournal of Financial Economics, 53
(2002)
Restatements.” Unpublished dissertation
G. Davis, H. Greve (1997)
Corporate Elite Networks and Governance Changes in the 1980sAmerican Journal of Sociology, 103
K. Raghunandan, W. Read, S. Whisenant (2003)
Initial Evidence on the Association between Nonaudit Fees and Restated Financial StatementsAccounting Horizons, 17
M. Mace (1971)
Directors: Myth and Reality
J. Harford (2003)
Takeover bids and target directors' incentives: the impact of a bid on directors' wealth and board seatsJournal of Financial Economics, 69
(2003)
MYERS; Z.-V. PALMROSE; AND S. SCHOLZ. “Mandatory Auditor Rotation: Evidence from Restatements.
Hooghiemstra Hooghiemstra, Van Manen Van Manen (2004)
“The Independence Paradox: (Im)possibilities Facing Non‐Executive Directors in the Netherlands.”Corporate Governance, 12
Agarwal Agarwal, Chadha Chadha (2005)
“Corporate Governance and Accounting Scandals.”Journal of Law and Economics
G. Davis, Mina Yoo, W. Baker (2003)
The Small World of the American Corporate Elite, 1982-2001Strategic Organization, 1
Hemang Desai, Chris Hogan, Michael Wilkins (2004)
The Reputational Penalty for Aggressive Accounting: Earnings Restatements and Management TurnoverSMU Cox: Accounting (Topic)
D. Farber (2004)
Restoring Trust after Fraud: Does Corporate Governance Matter?Financial Accounting
D. Larcker, Scott Richardson, David Chun, Roger Boissonnas, Equilar Inc, J. Thomas (2004)
Does Corporate Governance Really Matter ?
J. Livingston (1997)
Management-borne costs of fraudulent and misleading reporting
D. Yermack (1996)
Higher market valuation of companies with a small board of directorsJournal of Financial Economics, 40
D. Larcker, Scott Richardson, A. Tuna (2005)
How Important is Corporate Governance?SPGMI: Compustat Fundamentals (Topic)
Reggy Hooghiemstra, J. Manen (2004)
The Independence Paradox: (Im)Possibilities Facing Non-Executive Directors in the NetherlandsEuropean Finance
Bernard Black, B. Cheffins, M. Klausner (2003)
Outside Director Liability (Before Enron and Worldcom)Asian Private Law (Topic)
M. Beasley (1998)
An Empirical Analysis of the Relation between Board of Director Composition and Financial Statement Fraud
D. Yermack (2002)
Remuneration, Retention, and Reputation Incentives for Outside DirectorsIO: Firm Structure
William Kinney, Linda Mcdaniel (1989)
Characteristics of firms correcting previously reported quarterly earningsJournal of Accounting and Economics, 11
U. Peyer, Tod Perry (2003)
Board Seat Accumulation by Executives: A Shareholder's PerspectiveCorporate Finance: Governance
M. Jensen (1993)
The Modern Industrial Revolution, Exit, and the Failure of Internal Control SystemsCGA: Governance & Internal Control Systems (Topic)
Anup Agrawal, Sahiba Chadha (2003)
Corporate Governance and Accounting ScandalsSocial Science Research Network
Robert Bushman, Qi Chen, Ellen Engel, Abbie Smith (2003)
Financial Accounting Information, Organizational Complexity and Corporate Governance SystemsSPGMI: Compustat Fundamentals (Topic)
Scott Richardson, A. Tuna, Min Wu (2002)
Predicting Earnings Management: The Case of Earnings Restatements
(2003)
Warning Shot from SEC’s Cutler.
James Brickley, J. Coles, Rory Terry (1994)
Outside directors and the adoption of poison pillsJournal of Financial Economics, 35
Bernard Black, B. Cheffins, M. Klausner (2006)
Outside Director LiabilityUniversity of Texas School of Law
R. Khurana (2002)
Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOsAdministrative Science Quarterly, 48
Brickley Brickley, Coles Coles, Terry Terry (1994)
“The Board of Directors and Enactment of Poison Pills.”Journal of Financial Economics, 35
Davis Davis, Yoo Yoo, Baker Baker (2003)
“The Small World of American Corporate Elite, 1982–2001.”Strategic Organization, 1
M. Beneish (1999)
Incentives and Penalties Related to Earnings Overstatements that Violate GAAPAccounting review: A quarterly journal of the American Accounting Association, 74
Stuart Gilson (1990)
Bankruptcy, boards, banks, and blockholders: Evidence on changes in corporate ownership and control when firms defaultJournal of Financial Economics, 27
Robert Bushman, Qi Chen, Ellen Engel, Abbie Smith, Ray Ball, Sudipta Basu, Bill Beaver, Brian Bushee, Judy Chevalier, Thomas Hemmer, Bob Kaplan, Scott Keating, Randy Kroszner, Doron Nissim, Darius Palia, Canice Prendergast, Cathy Schrand, R. Watts, Jerry Zimmerman, Bruce Bower, Xia Chen, Farzad Farhangnia, Kathleen Fitzgerald, Rebecca Glenn, Karen Kirulis, John Kirulis, Eugene Kovacs, H. Shroff (2000)
The Sensitivity of Corporate Governance Systems to the Timeliness of Accounting Earnings *
Shivdasani Shivdasani, Yermack Yermack (1999)
“CEO Involvement in the Selection of New Board Members: An Empirical Analysis.”Journal of Finance, 54
Anup Agrawal, C. Knoeber (2001)
Do Some Outside Directors Play a Political Role?*The Journal of Law and Economics, 44
James Brickley, J. Coles, James Linck (1998)
What Happens to CEOs After They Retire? New Evidence on Career Concerns, Horizon Problems, and CEO IncentivesERN: CEO & Executive Motivation & Incentives (Topic)
Patricia Dechow, Richard Sloan, A. Sweeney (1996)
Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC*Contemporary Accounting Research, 13
E. Fama (1980)
Agency Problems and the Theory of the FirmJournal of Political Economy, 88
Bishop, W. Joseph (1968)
Sitting Ducks and Decoy Ducks: New Trends in the Indemnification of Corporate Directors and OfficersYale Law Journal, 77
Shijun Cheng, Venky Nagar, Madhav Rajan (2005)
Identifying Control Motives in Managerial Ownership: Evidence from Antitakeover LegislationReview of Financial Studies, 18
Palmrose Palmrose, Richardson Richardson, Scholz Scholz (2004)
“Determinants of Markets Reactions to Restatement Announcements.”Journal of Accounting and Economics, 37
K. Farrell, David Whidbee (2000)
The Consequences of Forced CEO Succession for Outside DirectorsThe Journal of Business, 73
J. Lorsch, Jackie Young (1989)
Pawns or Potentates: The Reality of America's Corporate Boards
ABSTRACT I use a sample of 409 companies that restated their earnings from 1997 to 2001 to examine penalties for outside directors, particularly audit committee members, when their companies experience accounting restatements. Penalties from lawsuits and Securities and Exchange Commission (SEC) actions are limited. However, directors experience significant labor market penalties. In the three years after the restatement, director turnover is 48% for firms that restate earnings downward, 33% for a performance‐matched sample, 28% for firms that restate upward, and only 18% for technical restatement firms. For firms that overstate earnings, the likelihood of director departure increases in restatement severity, particularly for audit committee directors. In addition, directors of these firms are no longer present in 25% of their positions on other boards. This loss is greater for audit committee members and for more severe restatements. A matched‐sample analysis confirms this result. Overall, the evidence is consistent with outside directors, especially audit committee members, bearing reputational costs for financial reporting failure.
Journal of Accounting Research – Wiley
Published: May 1, 2005
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.