| Corporate misconduct is a critical problem; it not only represents a breakdown of corporate ethics, but also undermines firm performance. Firm misconduct has been studied from a variety of vantage points, yet there remains great opportunity to better understand the antecedents and consequences---both economic and social---of financial misrepresentation, a specific form of corporate misconduct.; This thesis examines the influence of relative performance and managerial incentives on corporate misrepresentation, and then tests the relationship between misrepresentation and subsequent operating performance, including the moderating effects of change in board composition and CEO turnover. Using a hand-collected dataset from several archival sources of company records, I draw several important conclusions from the empirical analyses. First, CEO incentive pay and poor relative performance increase the likelihood of misrepresentation. Second, misrepresentation impairs subsequent operating performance, although this negative effect can be partially offset by CEO replacement and increased board independence.; The analysis includes a combination of estimation techniques, including categorical dependent variable and fixed-effect methods, all conducted using a matched sample of misrepresenting and non-misrepresenting firms.; This dissertation advances our academic understanding of corporate misconduct, and contributes to academic theory across research literatures, including strategic management, organization theory, and business ethics. The results are also likely to be of practical interest to corporate board members, top executives, and shareholders. |
