The Great Escape

Business Ethics Quarterly 23 (3):443-475 (2013)

Corporate governance scholarship focuses on executive malfeasance, specifically its antecedents and consequences. Academic efforts primarily focus on prevention while practitioners are often left to hold firms and executives (including directors) accountable through a variety of sanctions. Even so, executive malfea­sance still occurs even in the face of the vast resources used to monitor, control, and penalize firms and executives. In this paper, we posit equity markets do not adequately penalize firms for inaccurate earnings reports. Using a sample of 129 firms identified by the U.S. General Accounting Office for reporting fraudulent earnings in 10K filings, we found support for our assertion. Consequently, the one party who may benefit but escape accountability is firm shareholders. Moreover, we find little empirical evidence that the subset of firms sanctioned by the SEC is penalized more heavily than the full sample by markets at the time they report and correct their 10K filings. Our results raise serious questions whether such mana­gerial opportunism can be eradicated given the apparent lack of consequences in equity markets for investors. We also question whether the SEC is able to discern between fraud and error in financial reporting and its implications
Keywords Applied Philosophy  Business and Professional Ethics  Social Science
Categories (categorize this paper)
ISBN(s) 1052-150X
DOI 10.5840/beq201323328
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

Our Archive

Upload a copy of this paper     Check publisher's policy     Papers currently archived: 44,283
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

No references found.

Add more references

Citations of this work BETA

Professionalism, Agency, and Market Failures.Hasko von Kriegstein - 2016 - Business Ethics Quarterly 26 (4):445-464.

Add more citations

Similar books and articles


Added to PP index

Total views
10 ( #736,109 of 2,271,259 )

Recent downloads (6 months)
3 ( #420,316 of 2,271,259 )

How can I increase my downloads?


My notes

Sign in to use this feature