This study aims to provide new evidence linking internal corporate governance mechanisms and corporate misconduct, using a sample of 2,844 public US companies during the period 2007-2019. The results reveal that optimal size and diverse boards, including well-functioning audit com- mittees, are negatively related to corporate violations. In contrast, we show that board mem- bers’ independence, activity, and ownership are positively related to a rm’s fraudulent activities. Therefore, not all internal governance mechanisms are related to lower corporate misconduct. Moreover, we show that some internal governance mechanisms, such as the share of female board members, mitigate only certain types of corporate misconduct. The results show that attempts to regulate corporate governance mechanisms should be considered with caution as they do not always provide the expected outcome

Kowalewski, Oskar; Eugster, Nicolas; Spiewanowski, Piotr

This study aims to provide new evidence linking internal corporate governance mechanisms and corporate misconduct, using a sample of 2,844 public US companies during the period 2007-2019. The results reveal that optimal size and diverse boards, including well-functioning audit com- mittees, are negatively related to corporate violations. In contrast, we show that board mem- bers’ independence, activity, and ownership are positively related to a rm’s fraudulent activities. Therefore, not all internal governance mechanisms are related to lower corporate misconduct. Moreover, we show that some internal governance mechanisms, such as the share of female board members, mitigate only certain types of corporate misconduct. The results show that attempts to regulate corporate governance mechanisms should be considered with caution as they do not always provide the expected outcome

Oskar Kowalewski (), Nicolas Eugster and Piotr Spiewanowski ()
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Piotr Spiewanowski: Institute of Economics, Polish Academy of Sciences, Warsaw, Poland

No 2022-ACF-05, Working Papers from IESEG School of Management

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)
Pages: 46
Date: 2022-08
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