Internal governance mechanisms and corporate misconduct

Nicolas Eugster, Oskar Kowalewski () and Piotr Śpiewanowski

International Review of Financial Analysis, 2024, vol. 92, issue C

Abstract: This study aimed to provide new evidence linking internal corporate governance mechanisms and corporate misconduct by using a sample of 2,844 public US companies during the period 2007–2019. The results revealed that the optimal size and diversity of boards, including well-functioning audit committees, are negatively correlated with corporate violations. By contrast, it was shown that board members’ independence, activity, and ownership are positively correlated with a firm’s fraudulent activities. Therefore, not all internal governance mechanisms are related to reduced corporate misconduct. Moreover, the study shows that some internal governance mechanisms, such as the share of female board members, mitigate certain types of corporate misconduct.

Keywords: Corporate misconduct; Internal governance mechanisms; Board of directors; Committees; Ownership (search for similar items in EconPapers)
JEL-codes: G01 G34 G38 K22 L51 M41 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:92:y:2024:i:c:s1057521924000413

DOI: 10.1016/j.irfa.2024.103109

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