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Title: How firms respond to financial restatement : CEO successors and external reactions
Authors: Gomulya, David
Boeker, Warren
Keywords: DRNTU::Business::Management
Issue Date: 2014
Source: Gomulya, D., & Boeker, W. (2014). How firms respond to financial restatement : CEO successors and external reactions. Academy of management journal, 57(6), 1759-1785.
Series/Report no.: Academy of management journal
Abstract: Although past studies have paid considerable attention to firms' reputations, few have investigated the actions that firms take following a reputation-damaging event. We identify firms involved in financial earnings restatements and examine whether naming a successor CEO with specific qualities serves to signal the seriousness of a firm's efforts to restore its reputation. Using theories of market signaling, we argue that attributes of successor CEOs significantly influence the reactions of key external constituencies. In particular, firms with more severe restatement tend to name successors who have prior CEO or turnaround experience and a more elite education. The naming of such successors results in more positive reactions from the stock market, financial analysts, and mass media. We argue that these attributes send messages to stakeholders and the broader public about the CEO's credibility and the firm's efforts.
ISSN: 0001-4273
DOI: 10.5465/amj.2012.0491
Rights: © 2014 Academy of Management Journal.
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:NBS Journal Articles

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