Do good times breed cheats? Prosperous times have immediate and lasting implications for CEO misconduct

Bianchi, E C and Cohen Mohliver, A (2016) Do good times breed cheats? Prosperous times have immediate and lasting implications for CEO misconduct. Organization Science, 27 (6). pp. 1488-1503. ISSN 1047-7039

[img] Text (Do good times breed cheats)
Cohen MohliverA_Do_good_times_Final Org_Sci_AAM.pdf - Accepted Version
Restricted to Repository staff only until 30 December 2017.

Download (307kB)
Official URL: http://pubsonline.informs.org/doi/10.1287/orsc.201...

Abstract

We examine whether prosperous economic times have both immediate and lasting implications for corporate misconduct among CEOs. Drawing on research suggesting that prosperous times are associated with excessive risk-taking, overconfidence, and more opportunities to cheat, we first propose that CEOs will be more likely to engage in corporate misconduct during good economic times. Next, we propose that CEOs who begin their careers in prosperous times will be more likely to engage in self-serving corporate misconduct later in their careers. We tested these hypotheses by assembling a large dataset of American CEOs and following their stock option reporting patterns between 1996 and 2005. We found that in good economic times, CEOs were more likely to backdate their stock options grants. Moreover, CEOs who began their careers in prosperous times were more likely to backdate stock option grants later in their careers. These findings suggest that the state of the economy can influence current ethical behavior and leave a lasting imprint on the moral proclivities of new workforce entrants.

Item Type: Article
Additional Information: © 2016 INFORMS
Subjects: T > Top management
M > Misconduct
R > Recession
E > Ethics
Subject Areas: Strategy and Entrepreneurship
DOI: 10.1287/orsc.2016.1101
Date Deposited: 11 Nov 2016 14:49
Last Modified: 20 Feb 2017 15:49
URI: http://lbsresearch.london.edu/id/eprint/593

Actions (login required)

Edit Item Edit Item