Financial Fraud , Director Reputation , and Shareholder Wealth *

  title={Financial Fraud , Director Reputation , and Shareholder Wealth *},
  author={Eliezer M. Fich and Anil Shivdasani Kenan-Flagler and Anil. Shivdasani},
  • Eliezer M. Fich, Anil Shivdasani Kenan-Flagler, Anil. Shivdasani
  • Published 2005
We investigate the reputational impact of financial fraud for outside directors based on a sample of firms facing shareholder class action lawsuits. Following a financial fraud lawsuit, outside directors do not face abnormal turnover on the board of the sued firm but experience a significant decline in other board seats held. The decline in other directorships is greater for more severe cases of fraud and when the outside director bears greater responsibility for monitoring fraud. Interlocked… CONTINUE READING
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