The antecedents and consequences of top management fraud

Journal of Management

Volumn 31, Issue 6, 2005, Pages 803-828

  Zahra, Shaker A ^a   Priem, Richard L ^b   Rasheed, Abdul A ^c  

^a UNIVERSITY OF MINNESOTA   (United States)

^b UNIVERSITY OF WISCONSIN MILWAUKEE   (United States)

^c UNIVERSITY OF TEXAS AT ARLINGTON   (United States)

Author keywords

Antecedents of fraud; Consequences of fraud; Financial misstatements; Malfeasance; Top management fraud

Indexed keywords

EID: 28144464266     PISSN: 01492063     EISSN: None     Source Type: Journal    
DOI: 10.1177/0149206305279598     Document Type: Review

References (109)

1. American Institute for Certified Public Accountants. 1987. Report of the National Commission on Fraudulent Financial Reports. New York: Author.
2. Apostolou, B., Hassell, J. M., & Webber, S. A. 2000. Forensic expert classification of management fraud risk factors. Journal of Forensic Accounting, 1: 181-192.
3. Apostolou, B., Hassell, J. M., Webber, S. A., & Sumners, G. E. 2001. The relative importance of SAS No. 82 management fraud risk factors. Behavioral Research in Accounting, 13: 1-24.
4. Ashforth, B. E., & Anand, V. 2003. The normalization of corruption in organizations. Research in Organizational Behavior, 25: 1-52.
5. Ashforth, B. E., & Mael, F. 1989. Social identity theory and the organization. Academy of Management Review, 14:20-39.
6. Barton, J. 2001. Does the use of financial derivatives affect earnings management decisions? The Accounting Review, 76: 1-26.
7. Baucus, M. S. 1994. Pressure, opportunity and predisposition: A multivariate model of corporate illegality. Journal of Management, 20: 699-721.
8. Baucus, M. S., & Baucus, D. A. 1997. Paying the piper: An empirical examination of longer-term financial consequences of illegal corporate behavior. Academy of Management Journal, 40: 129-151.
9. Baucus, M. S., & Near, J. P. 1991. Can illegal corporate behavior be predicted? An event history analysis. Academy of Management Journal, 34: 9-36.
10. Beasley, M. S. 1996. An empirical analysis of the relation between the board of director composition and financial statement fraud. The Accounting Review, 71: 443-465.
11. Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Lapides, P. D. 2000. Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizons, 14: 441-454.
12. Becker, G. S. 1964. Crime and punishment: An economic approach. Journal of Political Economy, 76: 169-217.
13. Berenson, A. 2003. The number: How the drive for quarterly earnings corrupted Wall Street and corporate America. New York: Random House.
14. Betz, M., O'Connell, L. O., & Shepard, J. M. 1989. Gender differences in proclivity for unethical behavior. Journal of Business Ethics, 8: 321-314.
15. Boschen, J. F., Duru, A., Gordon, L. A., & Smith, K. J. 2003. Accounting and stock price performance in dynamic CEO compensation arrangements. The Accounting Review, 78: 143-168.
16. Braithwaite, J. 1984. Corporate crime in the pharmaceutical industry. London: Routledge.
17. Brown, L. D. 2001. A temporal analysis of earnings surprises: Profits vs. losses. Journal of Accounting Research, 39: 221-241.
18. Calavita, K., & Pontell, H. N. 1990. "Heads I win, Tails you lose": Deregulation, crime, and crisis in the savings and loan industry. Crime & Delinquency, 36: 309-341.
19. Calavita, K., Tillman, R.., & Pontell, H. N. 1997. The savings and loan debacle, financial crime, and the state. Annual Review of Sociology, 23: 19-38.
20. Child, J. 1974. Managerial and organizational factors associated with company performance: Part I. Journal of Management Studies, 11: 175-189.
21. Clinard, M. B. 1983. Corporate ethics and crime. Beverly Hills, CA: Sage.
22. Clinard, M. B., & Quinney, R. 1973. Criminal behavior systems: A typology. New York: Holt, Rinehart & Winston.
23. Cloward, R. A., & Ohlin, L. E. 1960. Delinquency and opportunity: A theory of delinquent gangs. New York: Free Press.
24. Cohen, A. K. 1955. Delinquent boys: The culture of the gang. New York: Free Press.
25. Cressey, D. 1953. Other people's money: A study of the social psychology of embezzlement. Glencoe, IL: Free Press.
26. Cullen, J. B., Parboteeah, K. P., & Hoegl, M. 2004. Cross national differences in managers' willingness to justify ethically suspect behaviors: A test of institutional anomie theory. Academy of Management Journal, 47: 411-421.
27. Daboub, A. J., Rasheed, A. M. A., Priem, R. L., & Gray, D. A. 1995. Top management team characteristics and corporate illegal activity. Academy of Management Review, 20: 138-170.
28. Daly, K. 1989. Gender and varieties of white-collar crime. Criminology, 27: 769-793.
29. Davidson, W. N., & Worrell, D. L. 1988. The impact of announcements of corporate illegalities on shareholder returns. Academy of Management Journal, 31: 195-200.
30. DuCharme, L., Malatesta, P., & Sefcik, S. 2001. Earnings management: IPO valuation and subsequent performance. Journal of Accounting, Auditing & Finance, 16: 369-396.
31. Dunn, P. 2004. The impact of insider power on fraudulent financial reporting. Journal of Management, 30:397-412.
32. Ermann, M. D., & Lundman, R. 1996. Corporate and governmental deviance. New York: Oxford University Press.
33. Fama, E. F. 1980. Agency problem and the theory of the firm. Journal of Political Economy, 88: 288-308.
34. Fama, E. F., & Jensen, M. C. 1983. Separation of ownership and control. Journal of Law and Economics, 26: 301-325.
35. Feldman, D. C. 2005. The food's no good and they don't give you enough: Reflections on managers not MBAs: A hard look at the soft practice of managing and management development by Henry Mintzberg. Academy of Management Learning & Education, 4(2): 217-220
36. Ferguson, M. J., & Majid, A. 2003. To sue or not to sue: An experimental study of factors affecting Hong Kong liquidators audit litigation decisions. Journal of Business Ethics, 46: 363-374.
37. Ferraro, F., Pfeffer, J., & Sutton, R. I. 2005. Economics language and assumptions: How theories can become self-fulfilling. Academy of Management Review, 30: 8-24.
38. Frank, R. H., Gilovich, T., & Regan, D. T. 1993. Does studying economics inhibit cooperation? Journal of Economic Perspectives, 7: 159-171.
39. Fukuyama, F. 1995. Trust: The social virtues of and the creation of prosperity. New York: Free Press.
40. Ghoshal, S. 2005. Bad management theories are destroying good management practices. Academy of Management Learning & Education, 4: 75-91.
41. Gottfredson, M. R., & Hirschi, T. 1990. A general theory of crime. Stanford, CA: Stanford University Press.
42. Grossman, S. J., & Hart, O. D. 1980. Takeover bids, the free-rider problem, and the theory of the corporation. The Bell Journal of Economics, 2: 42-64.
43. Guidry, F., Leone, A. J., & Rock, S. 1999. Earnings-based bonus plans and earnings management by business-unit managers. Journal of Accounting and Economics, 26: 113-142.
44. Hambrick, D. C., & Mason, P. 1984. Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9: 193-206.
45. Hamilton, V. L., & Sanders, J. 1999. The second face of evil: Wrongdoing in and by the corporation. Personality and Social Psychology Review, 3: 222-233.
46. Hansen, J. V., McDonald, J. B., Messier, W. F., & Bell, T. B. 1996. A generalized qualitative-response model and the analysis of management fraud. Management Science, 42: 1022-1032.
47. Healy, P. M. 1985. The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics, 13: 85-107.
48. Hirschi, T., & Gottfredson, M. 1987. Causes of white collar crime. Criminology, 25: 949-974.
49. Hirst, D. E. 1994. Auditor sensitivity to earnings management. Contemporary Accounting Research, 11: 405-422.
50. Howell, J. P., Dorfman, P. W., & Kerr, S. 1986. Moderator variables in leadership research. Academy of Management Review, 11: 88-102.
51. Jayne, V. 2003. Fraud and greed and the dark side of management. New Zealand Management, 50(2): 20-25.
52. Jensen, M. C. 1993. The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48: 831-880.
53. Judge, T. A., & Bono, J. E. 2000. Five-factor model of personality and transformational leadership. Journal of Applied Psychology, 85: 751-765.
54. Kelley, S. W., Ferrell, O. C., & Skinner, S. J. 1990. Ethical behavior among marketing researchers: An assessment of selected demographic characteristics. Journal of Business Ethics, 9: 681-688.
55. Kelman, H. C., & Hamilton, V. L. 1989. Crimes of obedience. New Haven, CT: Yale University Press.
56. Kesner, I. F., Victor, B., & Lamont, B. T. 1986. Board composition and the commission of illegal acts: An investigation of Fortune 500 companies. Academy of Management Journal, 29: 789-799.
57. KPMG fraud survey. 1999. http://www.aic.gov.au/research/fraud/ kpmg_aus_1999.pdf. Accessed February 28, 2005.
58. KPMG international fraud report. 1996. http://www.acsu.buffalo.edu/ ~evpatter/402SY/auddocs/ch2web/fraud.pdf. Accessed February 28, 2005.
59. Lawrence, B. S. 1997. The black box of organizational demography. Organization Science, 8: 1-22.
60. Loebbecke, J. K., Eining, M. M., & Willingham, J. J. 1989. Auditor's experience with material irregularities: Frequency, nature, and detectability. Auditing: A Journal of Practice & Theory, 9: 1-28.
61. Luo, Y. 2005. An organizational perspective of corruption. Management and Organization Review, 1: 119-154.
62. Matsumoto, D. A. 2002. Management's incentives to avoid negative earnings surprises. The Accounting Review, 77: 483-514.
63. Matsunaga, S. R., & Park, C. W. 2001. The effect of missing a quarterly earnings benchmark on the CEO's annual bonus. The Accounting Review, 76: 313-332.
64. Mauro, P. 1995. Corruption and growth. Quarterly Journal of Economics, 110: 681-712.
65. McKendall, M. A., & Wagner, J. A., III. 1997. Motive, opportunity, choice, and corporate illegality. Organization Science, 8: 614-645.
66. Merton, R. 1938. Social structure and "anomie." American Sociological Review, 3: 672-682.
67. Miller, D. 1991. Stale in the saddle: CEO tenure and the match between organization and environment. Management Science, 37: 34-52.
68. Mintzberg, H. 2004. Managers not MBAs: A hard look at the soft practice of management and management development. San Francisco: Berrett-Koehler.
69. Moberg, D. J. 1997. On employee vice. Business Ethics Quarterly, 7: 41-60.
70. Moore, E., & Mills, M. 1990. The neglected victims and unexamined costs of white-collar crime. Crime & Delinquency, 36: 408-418.
71. Murdock, H. 2003. Early warning system. The Internal Auditor, 60(4): 57-61.
72. Neubaum, D., & Zahra, S. In press. Institutional ownership and corporate social performance: The moderating effect of investment horizons, activism, and coordination. Journal of Management.
73. Organization for Economic Cooperation and Development. 2005. Links to sites on public sector ethics and corruption. http://www.oecd.org/ document/4/0,2340,en_2649_34135_2672772_1_1_1_1,00.html. Accessed February 28, 2005.
74. Payne, J. L., & Robb, S. W. G. 2000. Earnings management: The effect of ex ante earnings expectations. Journal of Accounting, Auditing & Finance, 15: 371-392.
75. Pettigrew, A. M. 1992. On studying managerial elites. Strategic Management Journal, 13: 163-182.
76. Posner, R. 1970. A statistical study of antitrust enforcement. Journal of Law and Economics, 13: 365-420.
77. Pratt, T. C., & Cullen, F. T. 2000. The empirical status of Gottfredson and Hirschi's general theory of crime: A meta-analysis. Criminology, 38: 931-964.
78. Prentice, R. 2003. Enron: A behavioral autopsy. American Business Law Journal, 40: 417-444.
79. Priem, R. L., Lyon, D. W., & Dess, G. G. 1999. Inherent limitations of demographic proxies in top management team heterogeneity research. Journal of Management, 25: 935-953.
80. Reed, G. E., & Yeager, P. C. 1996. Organizational offending and neoclassical criminology: Challenging the reach of a general theory of crime. Criminology, 34: 357-382.
81. Rest, J. R., & Thoma, S. J. 1986. Moral judgment, behavior, decision making, and attitudes. In J. R. Rest (Ed.), Moral development: Advances in research and theory: 133-175. New York: Praeger.
82. Robertson, D. C., & Anderson, E. 1993. Control system and task environment effects on ethical judgment: An exploratory study of industrial salespeople. Organization Science, 4: 617-644.
83. Saksena, P. 2001. The relationship between environmental factors and management fraud: An empirical analysis. International Journal of Commerce & Management, 11(1): 120-139.
84. Schnatterly, K. 2003. Increasing firm value through detection and prevention of white-collar crime. Strategic Management Journal, 24: 587-614.
85. Schweitzer, M. E., Ordóñez, L., & Douma, B. 2004. The role of goal setting in motivating unethical behavior. Academy of Management Journal, 47: 422-432.
86. Shapiro, S. P. 1990. Collaring the crime, not the criminal: Reconsidering the concept of white-collar crime. American Sociological Review, 55: 346-365.
87. Shiller, R. J. 2001. Exuberant reporting. Harvard International Review, 23(1): 60-65.
88. Shleifer, A., & Vishny, R. W. 1993. Corruption. Quarterly Journal of Economics, 108: 599-617.
89. Shover, N., & Hochstetler, A. 2002. Cultural explanation and organizational crime. Crime, Law & Social Change, 37: 1-18.
90. Simon, D., & Eitzen, S. 1993. Elite deviance. New York: Oxford University Press.
91. Simpson, S. S., & Koper, C. S. 1997. The changing of the guard: Top management characteristics, organizational strain, and antitrust offending. Journal of Quantitative Criminology, 13: 373-404.
92. Simpson, S. S., & Piquero, N. L. 2002. Low self-control, organizational theory, and corporate crime. Law & Society Review, 36: 509-547.
93. Staw, B. M., & Szwajkowski, E. 1975. The scarcity-munificence component of organizational environment and the commission of illegal acts. Administrative Science Quarterly, 20: 345-354.
94. Summers, S. L., & Sweeney, J. T. 1998. Fraudulently misstated financial statements and insider trading: An empirical analysis. The Accounting Review, 73: 131-146.
95. Sutherland, E. 1949. White-collar crime. New York: Holt, Rinehart & Winston.
96. Szwajkowski, E. 1985. Organizational illegality: Theoretical integration and illustrative application. Academy of Management Review, 10: 558-567.
97. Taylor, R. N. 1975. Gauge and experience as determinants of managerial information processing and decision making performance. Academy of Management Journal, 18: 74-81.
98. Thomas, A. R., & Gibson, K. M. 2003. Management is responsible, too. Journal of Accountancy, 195(4): 53-55.
99. Thompson, C. 2003. Powerful semantics. Internal Auditor, 60(1): 65-67.
100. Touby, L. 1994. In the company of thieves. Journal of Business Strategy, 15(3): 24-35.
101. Trevino, L. K., & Youngblood, S. A. 1990. Bad apples in bad barrels: A causal analysis of ethical decision-making behavior. Journal of Applied Psychology, 75: 378-385.
102. Trice, H. M., & Beyer, J. M. 1993. The cultures of work organizations. Englewood Cliffs, NJ: Prentice Hall.
103. Vaughan, D. 1996. The challenger launch decision: Risky technology, culture and deviance at NASA. Chicago: University of Chicago Press.
104. von Neumann, J., & Morgenstern, D. 1944. Theory of games and economic behavior New York: John Wiley.
105. Weiss, G. 2002. Revenge of the investor. Business Week, 3812(December 16): 116.
106. Wells, J. T. 2000. So that's why it's called a pyramid scheme. Journal of Accountancy, 190(4): 91-93.
107. Whan, J. 2003. Sex differences in competitive and compliant unethical work behavior. Journal of Business and Psychology, 18: 121-128.
108. Williams, R. J., Barrett, J. D., & Brabston, M. 2000. Managers' business school education and military service: Possible links to corporate criminal activity. Human Relations, 53: 691-712.
109. Zahra, S., & Pearce, J. 1989. Boards of directors and corporate financial performance: A review and integrative model. Journal of Management, 15: 291-334.