A changing of the guard: Executive and director turnover following corporate financial restatements

Marne L. Arthaud-Day, S. Trevis Certo, Catherine M. Dalton, Dan R. Dalton

Research output: Contribution to journalArticle

247 Scopus citations

Abstract

Using event history analysis, we found that CEOs and CFOs of firms filing a material financial restatement were more than twice as likely to exit their firms as their counterparts in a matched sample. Directors and audit committee members were approximately 70 percent more likely to exit in restatement firms. The magnitude, ubiquity, and temporal proximity of executive and director turnover following a restatement indicate that such events pose a serious threat to organizational legitimacy, independent of firm performance. Restatements therefore provide an important and unique context for studying the accountability of strategic leaders for organizational crises.

Original languageEnglish (US)
Pages (from-to)1119-1136
Number of pages18
JournalAcademy of Management Journal
Volume49
Issue number6
DOIs
StatePublished - Dec 2006
Externally publishedYes

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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