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This paper aims to study the impact of CEOs’ personality and social connections on corporate risk-taking in the Russian market.

Using a sample of 93 large listed Russian corporations between 2008 and 2016, this study tests a range of personal traits, including the classical personal characteristics like age and tenure, some country-specific traits such as connections and military experience, as well as other human and social capital characteristics.

This study finds non-linear relationships between corporate risk-taking and CEO age and tenure. This study also finds that firms run by CEOs with military experience take more corporate risk. On the CEOs’ social capital side, this study’s results suggest that both political and educational connections are positively related to corporate risk-taking.

This study also tests some traits that have usually been ignored by the literature, such as marital and family status.

Organizational crises are complex events for researchers to assess. However, research in this domain remains fragmented, and advanced empirical techniques remain underutilized. In this chapter, we offer an integrated approach to assessing crises. We first specify a behavioral process model of crisis management comprised of three stages: interpretations, responses, and outcomes. Within each stage, we identify areas of opportunity and provide methodological recommendations that enhance our understanding of crises and crisis management. We also provide recommendations that could be applied across stages of the model. Taken together, we present a framework by which researchers can more effectively measure and analyze critical crisis dimensions.

The purpose of this paper is to compare the effect of corporate governance variables and fraud litigation on audit fees both before and after the implementation of the Sarbanes‐Oxley (SOX) Act in 2002.

The paper utilizes a sample of firms that had litigation proceedings filed against them for fraudulent financial reporting, and compare these firms to a sample of non‐fraud firms in the pre‐and post‐SOX period. First, the authors examine indicators of audit fees using the Simunic model. Next, the authors develop a logistic regression model with corporate governance variables and other financial control variables in order to identify the characteristics of firms that are accused of fraud in the pre‐and post‐SOX period.

The paper identifies specific components of corporate governance that are positively related to audit fees and which subsequently aid in classifying companies subject to fraud litigation. The most successful logistic regression model for 2005 (post‐SOX) is 64.4 per cent accurate in distinguishing firms litigated for fraud, while the most successful model for 2001 (pre‐SOX) is 61.4 per cent accurate in distinguishing such firms.

The research design and findings assist in providing additional evidence about the association between the effectiveness of the corporate governance structure and the external auditor in assessing the risk of fraud.

This paper aims to examine the monitoring role of institutional investors in corporate decision-making by classifying financial institutions based on geographical proximity and investment horizon from 1980 to 2014.

By using unique data sets on firm and institution location and investor horizon measure (Gaspar et al., 2005), the authors categorize institutional investors into six proximity-horizon classifications. This method captures the heterogeneity of investors. The corporate decisions assessed include firm investment, financing, payout policy, misbehavior, takeover defenses and profitability.

Both geographical proximity and investment horizon are directly related to institutional investors' monitoring cost. As a result, the effectiveness of institutional monitoring may vary based on geographical proximity and investment horizon. This paper collectively examines both dimensions of financial institutions and provides evidence that institutional investors present different preferences for corporate policies. Given stronger information advantage, both local and nonlocal investors that are long-term oriented fulfill better roles in monitoring corporate decisions but from different perspectives.

Different from previous studies that treat institutional investors homogeneously, this paper provides empirical support that investors are indeed different in influencing firm policies.

To the authors’ best knowledge, this is the first study that classifies investors based on two dimensions, geographical proximity and investment horizon, and examines their joint effects on corporate policies. This proximity-horizon classification allows the authors to better disentangle the effects of institutional ownership structure on the monitoring outcomes.

Corporate crime affects the stability of the international financial system and the business world system has made considerable efforts to fight all aspects of corporate crimes. Fraud and white-collar crime has increased considerably over the recent years and this trend is expected to continue.

This chapter defines corporate crime and its categories as well as considering the ways in which such crime occurs. This is set within the context of other failures such as Enron.

These crimes are considered in the context of ethical behaviour but it is reported that the various measures taken to dissuade these crimes at various levels just have not seems to reduce such crime.

In many respects this chapter introduces the contexts and acts as preparation for the other chapters in the book and so is not exhaustive in scope.

Since not all fraud and abuse is discovered and reported, the cost of fraud to businesses is hard to be estimated.

The chapter discusses the context in which corporate crime occurs.

This paper aims to examine the impact of public scrutiny on chief executive officer (CEO) compensation at Standard & Poor’s (S&P) 500 firms.

This paper uses the unique opportunity provided by the 2008 financial crisis and, in particular, government support and legislated compensation restrictions in the US Department of the Treasury’s Troubled Asset Relief Program (TARP). It aggregates monetary and non-monetary executive compensation information from 2006 to 2012, with firm- and manager-level data. It presents univariate summary compensation results and uses multivariate regression analysis to isolate the impact of public scrutiny and legislated compensation restrictions on executive pay.

Overall, the results are consistent, with increased public scrutiny having a lasting impact on perks and temporary impact on wage and legislated compensation restrictions having a temporary impact on wage. Changes in specific perk items provide evidence on which perks firms perceive as excessive and which provide common value.

The paper contributes to the discussion of perks as excess by introducing a novel data set of perk compensation at S&P500 firms and by studying how firms choose to alter levels of specific perk items in response to increased public scrutiny and legislated compensation restrictions. The paper contributes to the literature on executive pay as there has been little inquiry into the impact of public scrutiny on compensation. Public scrutiny could be an important source of external governance if firms change behavior in response to explicit and implicit scrutiny costs.

The purpose of this paper is to examine the impact of conversion to REIT status by former listed property companies in the United Kingdom on the level of institutional ownership during the period of 2007–2016.

This paper uses an event study framework to track the change in institutional ownership three years before and after a REIT conversion event. This event study approach circumvents the sample selection bias issue associated with the conversion event wherein the decision to convert to REIT is likely to be endogenous.

Panel regression analysis reveals that changing to REIT status led to a 12.8 and 15.2% increase in institutional ownership and number of institutional investors, respectively. The first order of priority in institutional investors' investment in REIT shares is their preference for liquidity. Further analysis shows that institutional investors changed their preferences towards characteristics associated with systematic risk, firm age and liquidity after the conversion event by becoming less averse to firm-specific risk, placing more emphasis on firm age and less emphasis on systematic risk and liquidity.

Overall, conversion to REIT status helps increase former property companies' investor base, which is in line with the regulator's aim to open up the property market to a wide range of investors through the introduction of a REIT regime. Findings from this paper also have policy implications for countries that are considering a REIT regime for their capital market and existing REIT regimes without a formal conversion mechanism.

This paper offers, for the first time, evidence on 1) how conversion to REITs influences firms' institutional ownership and 2) the determinants of converted REITs' institutional ownership.

This study aims to examine the reputation effect by assessing whether fraudulent financial reporting is associated with high board turnover and significant loss of directorship held by directors affiliated with fraud firms. Although the Sarbanes–Oxley Act (SOX) and major stock exchanges enhance board independence and formalize committee requirements, the new rules also create a high demand for qualified directors in the director labor market. Thus, this study further examines the change in the reputation effect of directors at fraud firms after SOX.

This paper intends to answer two research questions: Do directors suffer significant loss of reputation when firms are caught in fraudulent financial reporting schemes? Is the loss of reputation of directors at fraud firms affected by the regulation of SOX? To examine the reputation effect, this paper investigates the differences in director turnover and loss of directorships between fraud and non-fraud firms. To examine the regulation effect, this paper investigates the differences in director turnover and loss of directorships of directors at fraud firms by comparing non-fraud firms’ director turnover and directorship loss between the pre-SOX and post-SOX periods.

Consistent with the reputation effect, this paper found that director turnover at fraud firms is significantly higher than that at non-fraud firms. It also found that the loss of directorships of directors at fraud firms is not significantly higher, which is consistent with findings of some prior research. The paper also investigates whether this reputation effect has changed after SOX but found no significant difference in the reputation effect at fraud firms. In conjunction with prior research that finds an increased demand for qualified directors in the labor market after SOX, the results imply that this shortage of qualified directors does not help fraud firms discipline directors after SOX.

The findings are limited by the sample selection of only the initial litigation of US firms which are charged of fraudulent financial reporting. The findings suggest that SOX creates an increased demand for qualified directors, and consequently results in a shortage of qualified directors in the post-SOX labor market. The shortage of qualified directors slows the director turnover and weakens firms’ ability to replace culpable directors. Future research is needed on how governance practices might contribute to the lack of turnover among board members and how to promote ongoing overhauls of boards.

The decision process for removing a director is complicated and lacks transparency. Shareholders often do not know the real reason for a director’s departure from the board. To increase the accountability of individual directors and information transparency, new rules are needed for the disclosure of evaluations of individual directors’ governance effectiveness.

Survey of previous studies (Helland, 2006; Srinivasan, 2005; Fich and Shivdasani, 2007) indicates mixed evidence on reputation effect and no evidence so far on the SOX regulation effect. This study fills the gap by extending the findings of prior research to investigate the reputation effect along with the regulation effect of SOX at fraud firms. Different from findings of some previous studies (Helland, 2006; Fich and Shivdasani, 2007), this paper provides evidence consistent with the reputation effect. It also provides new evidence on the unintended consequences of SOX on director turnover.