CEO Accountability for Corporate Fraud: Evidence from the Split Share Structure Reform in China

Jiandong Chen (), Douglas Cumming, Wenxuan Hou () and Edward Lee ()
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Jiandong Chen: Southwestern University of Finance and Economics
Wenxuan Hou: University of Edinburgh Business School
Edward Lee: University of Manchester Crawford House

Journal of Business Ethics, 2016, vol. 138, issue 4, No 10, 787-806

Abstract: Abstract We use institutional-related theories and a unique natural experiment that enables an exogenous test of the influence of controlling shareholders on managerial accountability to corporate fraud. In China, prior to the Split Share Structure Reform (SSSR), state shareholders held restricted shares that could not be traded. This restriction mitigated state-owned enterprise controlling shareholders’ incentives to monitor managers. The data examined show the SSSR strengthens incentives of state-owned enterprise controlling shareholders to replace fraudulent management. Our findings support the view that economic incentives are important to promote corporate governance and deter fraud.

Keywords: CEO turnover; Corporate fraud; Ownership; Split Share Structure Reform; China (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (23)

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DOI: 10.1007/s10551-014-2467-2

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