Corporate Culture: Evidence from the Field

Why do some firms generate great wealth for investors and offer innovative solutions to problems, while seemingly similar firms are much less successful?  Why do employees at some firms repeatedly act unethically, shocking their leaders with scandals, while seemingly similar employees at other firms are quick to blow the whistle on unethical actions?  One answer might be corporate culture.  While policymakers, executives, and the press often credit corporate culture with some of the greatest business successes and failures, there is limited large-scale evidence to support such arguments.  In our recent article, “Corporate Culture: Evidence from the Field,” available here, … Read more

Evidence on Contagion in Management of Earnings

In this paper, we study peer firm behavior to ascertain (i) whether exposure to financial misrepresentation fuels similar behavior or deters it among peer firms; and (ii) what factors increase or decrease the likelihood of contagion? The prior years have witnessed a remarkable increase in news about corporate misconduct including fraudulent financial reporting at companies such as Enron, WorldCom, and Tyco, the collapse of Arthur Andersen on allegations of lax or corrupt audit work, tax shelters structured by KPMG to assist clients in minimizing tax obligations, and the revelation of the $50 billion Ponzi scheme run by Bernie Madoff. Given … Read more