Whistle Blowing, Forced CEO Turnover, and Misconduct: The Role of Socially Minded Employees and Directors

Frederick Bereskin (), Terry Campbell () and Simi Kedia ()
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Frederick Bereskin: University of Missouri, Columbia, Missouri 65211;
Terry Campbell: Finance, University of Delaware, Newark, Delaware 19716;
Simi Kedia: Finance and Economics, Rutgers, Piscataway, New Jersey 08854

Management Science, 2020, vol. 66, issue 1, 24-42

Abstract: We examine the response of prosocial employees and boards of directors to corporate misconduct. We develop several proxies for the presence of prosocial employees and directors based on the density of social networks and social capital in the county of the firms’ headquarters and companies’ relevant corporate social responsibility ratings. We document that proxies for prosocial employees and directors are associated with an increase in whistle blowing and forced chief executive officer turnover in a sample of firms that engage in misconduct. The higher expected cost of misconduct in firms with prosocial employees is associated with a lower likelihood of misconduct. Our findings highlight the role of nonfinancial imperatives of employees and directors in mitigating misconduct.

Keywords: misconduct; whistle blowing; prosocial employees; forced CEO turnover (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:66:y:2020:i:1:p:24-42

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