HCBE Faculty Articles
Former Members of the U.S. Congress and Fraud Enforcement: Does it help to have Politically Connected Friends on the Board?
Document Type
Article
Publication Title
The Quarterly Review of Economics and Finance
Publication Date
11-2018
Abstract/Excerpt
We investigate the relationship between the presence of former members of the U.S. Congress on corporate boards and fraud enforcement. We find that corporate fraud in companies with such members on the board stays undetected longer. When caught, such companies pay lower penalties. The appointment of former Congressional members to the board also lessens the probability of the company being subjected to Accounting and Auditing Enforcement Releases by the SEC after they face class-action lawsuits for fraudulent activities. Our results remain robust to the presence of other means of making political connections, such as lobbying, hiring revolving-door lobbyists, and contributing to political campaigns.
DOI
10.1016/j.qref.2018.04.011
Volume
70
First Page
77
Last Page
89
NSUWorks Citation
Kuvvet, Emre and Maskara, Pankaj Kumar, "Former Members of the U.S. Congress and Fraud Enforcement: Does it help to have Politically Connected Friends on the Board?" (2018). HCBE Faculty Articles. 1133.
https://nsuworks.nova.edu/hcbe_facarticles/1133
