Accounting and Control

Whistle-Blowers on the Board? The Role of Independent Directors in Cartel Prosecutions

Print Share
Market reactions to news of cartel prosecutions are muted when indicted firms have a high proportion of independent directors on their boards. Independent directors serving on cartel-indicted firms are penalized by losing board seats and vote support at other firms where they serve. Notably, firms with more independent directors are more likely to cooperate with prosecutors through leniency programs. They are also more likely to dismiss chief executive officers after cartel indictments. Our study shows that cartel prosecution imposes significant, market-based personal costs on independent directors and that they take actions to mitigate those costs.
Bibliographic citation: Campello, Murillo; Ferres, Daniel; Ormazábal, Gaizka, "Whistle-Blowers on the Board? The Role of Independent Directors in Cartel Prosecutions", The Journal of Law and Economics, Vol. 60, No. 2, 2017, pp 241 - 268

Reference: 10.1086/694826 (DOI)
Date: 05/2017
Author(s): Campello, Murillo; Ferres, Daniel; Ormazábal, Gaizka
Document type: Article in Journal (refereed)
Languages: English