2021 Volume 55 Issue 2 Pages 18-30
In this paper, we quantitatively examine the effect of governance factors, including board characteristics (e.g., outside directors), managerial incentives and ownership structure on intentional scandals (e.g., accounting fraud such as window-dressing, fraudulent claim of product origin, falsification of experimental data and cartels) and accidental scandals (e.g., recalls, information leaks and food poisoning). As a result, we found the followings: 1) governance affects corporate scandals, 2) effective governance depends on the type of scandal, and 3) certain scandals cannot be prevented by governance.
