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Accounting Review


entrenchment; turnover; founders; restatements; IPO.


  1. Andrew J. Leone
  2. Michelle Liu




    This study tests the hypothesis that founder CEOs are less likely to be
    fired than non-founder CEOs when accounting irregularities are disclosed. We also
    examine whether CFOs are more likely to shoulder the blame when the CEO is a
    founder. Using a sample of 96 newly public firms with accounting irregularities, and a
    control sample of similar newly public firms, we document that the probability of CEO
    (CFO) turnover in the wake of an accounting irregularity is lower (higher) when the firm’s
    CEO is also a founder. The difference in CEO turnover rates is dramatic, with nonfounder
    CEOs turning over at a rate of 49 percent, as compared to only 29 percent
    for founder CEOs. Our overall findings are consistent with the notion that the board’s
    response to irregularities differs when the CEO is a founder.


    Vol 85, Nomor 01, Tahun 2010


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