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ViewAttendees 4

2024 AOM Annual Meeting

STR

Session: 1050: External Influences on Corporate Choices

1050: Developing a Novel Theory of Corporate Misconduct Using Abductive Reasoning: A Mixed-Method Approach (13883)

Sunday, August 11, 2024
16:45 – 18:15 CT (GMT-5/UTC-5)
Location: Sheraton: Ohio
Session Number: 1050
Paper Session
Orientation: Research
Shareable link: https://cdmcd.co/MK7r5B
Designated as a “Best Paper” by STR
view abridged “best paper” (if available)

We propose that a mixed-method approach combining machine learning with follow-up studies is ideal for simultaneously engaging in prediction and explanation. Based on publicly available in-formation, we trained a machine learning algorithm to predict whether publicly traded corpora-tions engaged in misconduct. The algorithm correctly identified 58.2% of the misconduct cases in out-of-sample data, indicating high sensitivity. An analysis of the algorithm’s basis of predic-tion revealed a novel predictor of misconduct: the CEO’s outside directorships. Experiments found that managers informed that they were serving on multiple external boards experienced a greater sense of power, which increased their willingness to engage in misconduct. This research sets a new standard for identifying corporate misconduct based on publicly available data and builds a new theory of corporate misconduct.

view paper (if available)