01328nam a22001097a 4500008004100000022001400041245018500055260004000240300001800280440005500298500086500353190311b        xxu||||| |||| 00| 0 eng d  a0304-405X  aThe consequences of managerial indiscretions: Sex, lies, and firm value / by Brandon N. Cline, Ralph A. Walkling & Adam S. Yore cBrandon N. Cline, Ralph A. Walkling & Adam S. Yore  aAmsterdambElsevier cFebruary 2018  aPages 389-415  aJournal of Financial Economicsv127 (2)x0304-405X  aAbstract
Personal managerial indiscretions are separate from a firm's business activities but provide information about the manager's integrity. Consequently, they could affect counterparties’ trust in the firm and the firm's value and operations. We find that companies of accused executives experience significant wealth deterioration, reduced operating margins, and lost business partners. Indiscretions are also associated with an increased probability of unrelated shareholder-initiated lawsuits, Department of Justice and Securities and Exchange Commission investigations, and managed earnings. Further, chief executive officers and boards face labor market consequences, including forced turnover, pay cuts, and lower shareholder votes at re-election. Indiscretions occur more often at poorly governed firms where disciplinary turnover is less likely.