Executives misconducts and their consequences on the associated companies’ stock markets

• Autor(a) principal: Gaspar, Cláudia Ester Novo
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/29111
• topic: Event study; Corporate scandals; Financial impact; Executives misconduct; Financial misconduct; Personal misconduct; Estudo de evento; Escândalos corporativos; Impacto financeiro; Indevida conduta executiva; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

Corporate scandals drive news and media outbursts which temporarily catch the public’s interest; however, they may have a more significant effect on the business world. The purpose of this dissertation is to determine how executives misconduct affect the stock market price of their associated companies. All scandals that occurred between January 2013 and March 2019 within companies from S&P 500 and NASDAQ indexes were considered, with two exceptional cases. For this purpose, an event study methodology was applied. The findings suggest that corporate scandals committed by executives negatively affect the stock price of the concerned companies. Scandals were grouped by characteristics to outline various patterns. Related to type, financial scandals cause a more significant impact on the value of companies than personal misconduct. In terms of industries, technology is more negatively influenced by the occurrence of a scandal than other industries. Regarding the position of the executives in the company, scandals concerning individuals in top positions affect more the stock price than scandals exercised by lower executives. The last characteristic, being a former or current executive within the company, led to inconclusive results regarding the value of the company following a scandal. In order to determine which characteristics, the market has penalised most severely in these companies under study, a regression analysis was carried out. The results are consistent in showing that an executive holding a top position is a crucial negative factor when a scandal is announced.