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CEO demographics and accounting fraud: Who is more likely to rationalize illegal acts?

Year: 2011

Type: article

Abstract: This article proposes that key CEO demographic factors reflect alternative modes of rationalizing the choice to engage in and/or facilitate accounting fraud. Specifically the authors theorize that younger, less functionally experienced CEOs and CEOs without business degrees will be more likely to rationalize accounting fraud as an acceptable decision. Based on a sample of 312 fraud-committing and control firms, the study finds support for the authors’ predictions. It also finds that CEO stock options (a form of executive equity incentive) also predict fraud, and that this relationship is not moderated by CEO demographics. The study thus extends upper echelon theory by demonstrating how key demographic variables influence CEO decisions to rationalize accounting fraud.

Source: Strategic Organization

DOI: 10.1177/1476127011421534

Authors: Carmelita Troy, Ken G. Smith, Madeline A. Domino

Institutions: Andrews University, University of Rhode Island, Georgia State University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2312978565

FWCI: 5.697

Cites: 102

Cited by: 141

Related to: 10