Defense Procurement Fraud, Penalties, and Contractor Influence

Karpoff, Jonathan M.; Lee, D. Scott; Vendrzyk, Valaria P.

doi:10.1086/250080

Cited by 125 publications

(68 citation statements)

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“…17 The literature also proposes various measures of firms' political influence, including lobbying expenditures 17 Several recent papers use the data in Table III to exclude motivating firms from their empirical tests that use state antitakeover laws to identify exogenous changes in firms' takeover protection, including John, Kynazeva, and Kynazeva (2015), Amore and Bennedsen (2016), Bhattacharya, Li, and Rhee (2016), Caton et al (2016), Gao, Li, and Ma (2017), Gormley and Matsa (2016), John, Li, and Pang (2017), Loderer, Stulz, and Waelchli (2017), Pasquariello (2017), John and Kadyrzhanova (2017), Fich, Harford, and Yore (2017), Keum (2017), and Tang (2017). Table A1 lists a total of 18 (e.g., Yu and Yu (2011)), campaign contributions (Hill et al (2013)), and federal contract revenues (Karpoff, Lee, and Vendrzyk (1999)). In our replication tests, we identify influential firms using data from Table III, which lists firms that publicly lobbied for their antitakeover laws.…”

Section: Institutional and Legal Context Concerns As Omitted Variamentioning

confidence: 99%

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Karpoff¹,

Wittry²

2018

The Journal of Finance

223

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We argue and demonstrate empirically that a firm's institutional and legal context has first‐order effects in tests that use state antitakeover laws for identification. A priori, the size and direction of a law's effect on a firm's takeover protection depends on (i) other state antitakeover laws, (ii) preexisting firm‐level takeover defenses, and (iii) the legal regime as reflected by important court decisions. In addition, (iv) state antitakeover laws are not exogenous for many easily identifiable firms. We show that the inferences from nine prior studies related to nine different outcome variables change substantially when we include controls for these considerations.

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Section: Institutional and Legal Context Concerns As Omitted Variamentioning

confidence: 99%

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Karpoff¹,

Wittry²

2018

The Journal of Finance

223

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“…Corporate fraud reduces investor confidence and shareholder wealth, which in turn leads to misallocation of capital and instability in the financial market (Karpoff, et al 1999;Murphy et al 2009). The literature identifies top management as one of the key antecedents of corporate fraud (Baucus 1994;Efendi et al 2007;Khanna et al 2012).…”

Section: Theory and Hypothesismentioning

confidence: 99%

CEO Accountability for Corporate Fraud: Evidence from the Split Share Structure Reform in China

et al. 2014

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We use institutional-related theories and a unique natural experiment that enables an exogenous test of the influence of controlling shareholders on managerial accountability to corporate fraud. In China, prior to the Split Share Structure Reform (SSSR), state shareholders held restricted shares that could not be traded. This restriction mitigated state-owned enterprise controlling shareholders' incentives to monitor managers. The data examined show the SSSR strengthens incentives of stateowned enterprise controlling shareholders to replace fraudulent management. Our findings support the view that economic incentives are important to promote corporate governance and deter fraud.

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“…Both are statistically significant. Davidson et al examine 16 instances in which a firm evaded taxes and find an average 3-day abnormal 9 Two other studies of US traded firms focus on defense procurement fraud (Karpoff et al, 1999) and environmental violations (Karpoff et al, 2005). There are not enough observations in our sample to make a meaningful comparison with either study.…”

Section: Comparison Of Japan and The Usamentioning

confidence: 93%

“…Other non-demonstrable behavior can also cause perceived changes in product quality and be penalized through reputational effects. Studies find reputational costs stemming from criminal fraud (Karpoff and Lott, 1993), deceptive bidding practices (Smith, 1992), defense procurement fraud (Karpoff et al, 1999) and financial misrepresentation (Karpoff et al, 2008).…”

Section: Hypothesis Development and Literature Reviewmentioning

confidence: 99%

Reputational Penalties inJapan: Evidence from Corporate Scandals

Tanimura¹,

Okamoto

2013

Asian Economic Journal

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We examine incidents in which Japanese businesses are implicated in corporate scandals. Such firms suffer statistically significant losses in their market values. Given the negligible legal and regulatory penalties for Japanese companies, we interpret the results as convincing evidence on the magnitude of reputational losses. We also compare our results to those found in US studies. The average negative abnormal stock price reaction is larger in Japan than in the USA. Moreover, they are negative and statistically significant even when it is not obvious that the firm violated an implicit or explicit contract with the damaged party.

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Defense Procurement Fraud, Penalties, and Contractor Influence

Cited by 125 publications

References 0 publications

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

Institutional and Legal Context in Natural Experiments: The Case of State Antitakeover Laws

CEO Accountability for Corporate Fraud: Evidence from the Split Share Structure Reform in China

Reputational Penalties inJapan: Evidence from Corporate Scandals

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