{"id":1114,"date":"2013-03-18T11:29:15","date_gmt":"2013-03-18T15:29:15","guid":{"rendered":"http:\/\/markkirkwood.com\/?p=1114"},"modified":"2013-04-18T08:57:19","modified_gmt":"2013-04-18T12:57:19","slug":"the-telltale-signs-of-corporate-fraud","status":"publish","type":"post","link":"https:\/\/blog.markkirkwood.com\/?p=1114","title":{"rendered":"The telltale signs of corporate fraud"},"content":{"rendered":"

A new working paper (abstract<\/b><\/a>; PDF<\/b><\/a>) by Tanja Artiga Gonzalez<\/b>, Markus Schmid<\/b>, and David Yermack <\/b>looks for the telltale signs of corporate fraud. The paper is called \u201cSmokescreen: How Managers Behave When They Have Something To Hide\u201d:<\/p>\n

We study financial reporting and corporate governance in 216 U.S. companies accused of price fixing by antitrust authorities.\u00a0 We document a range of strategies used by these firms when reporting financial results, including frequent earnings smoothing, segment reclassification, and restatements.\u00a0 In corporate governance, cartel firms favor outside directors who are likely to be inattentive monitors due to their status as foreign or \u201cbusy.\u201d When directors resign, they are often not replaced, and new auditors are rarely engaged.\u00a0 Cartel managers exercise their stock options faster than managers of other firms.\u00a0 While our results are based only upon firms engaged in price fixing, we expect that they should apply generally to all companies in which managers seek to conceal poor performance or personal wrongdoing.<\/em><\/p>\n

The authors are wise to note that these findings aren\u2019t necessarily generalizable, and it is also worth wondering if this method could be applied prophylactically to identify fraud. Note: Yermack<\/b><\/a> is the same man who brought us \u201cTailspotting: How Disclosure, Stock Prices and Volatility Change When CEOs Fly to Their Vacation Homes<\/b><\/a>.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A new working paper (abstract; PDF) by Tanja Artiga Gonzalez, Markus Schmid, and David Yermack looks for the telltale signs of corporate fraud. The paper is called \u201cSmokescreen: How Managers Behave When They Have Something To Hide\u201d: We study financial reporting and corporate governance in 216 U.S. companies accused of price fixing by antitrust authorities.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[8],"class_list":["post-1114","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-ideas"],"_links":{"self":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/posts\/1114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1114"}],"version-history":[{"count":0,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/posts\/1114\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}