My dissertation investigates the social mechanisms that determine the allocation of consequences of earnings restatements for organizational elites, using a sample S&P1500 Index-listed firms restating earnings between 1997 and 2003. In chapter 1, I examine turnover following revelations of organizational misconduct. I find that outside director turnover is associated with greater board independence, which suggests voluntary departure. In contrast, insider turnover is associated with plausible claims of accountability and weaker chief executives, suggesting that their departure is involuntary. Taken together, these results indicate that turnover is a function of organizational stigmatization as regards outside directors and scapegoating as regards insiders. In chapter 2, I investigate the observed loss in external board seats that organizational elites suffer following earnings restatements. First, I ask whether organizational elites' reputations are damaged irrevocably through pollution, consistent with stigma by association, or if stigmatization can be measured in degrees, consistent with direct stigmatization. I elaborate the degree to which outcomes are determined by signals of underlying realities or symbols that may be decoupled from underlying realities. My findings suggest that although some pollution occurs, stigmatization is not binary, and the degree to which managers and directors of restating firms suffer on external labor markets is affected by both symbolic and substantive aspects of the restatement. In chapter 3, I investigate how the steps taken to shape public opinion by organizational elites in the wake of revelations of organizational misconduct affect organizational elites' outcomes on internal and external labor markets. I study how the relative power of organizational elites affects their choice of symbolic management tactics, and how efforts to put themselves in the best light through attributions of responsibility affect both organizational elites' tendency to depart the restating firm and to retain seats on external boards. My analysis suggests that relative board power impacts the way the firm frames the restatement, but the majority of these efforts have little effect on turnover or the loss of seats on external boards. My findings suggest that efforts at symbolic management are often unsuccessful, although powerful elites who make difficult decisions are systematically rewarded.

Last modified

• 08/13/2018

Creator

• Jo-Ellen Pozner

DOI

• https://doi.org/10.21985/N2213M

Subject

• Management and Organizations

Keyword

• organizational misconduct
• power and politics
• Organizational theory
• corporate governance
• symbolic management
• signaling theory

Date created

• 2007-08-16

Resource type

• Dissertation

Rights statement

• In Copyright