Abstract
This study examines the impact of board characteristics (gray directors, multiple directorships and block holder representation on the board) on the occurrence of fraud. Our sample consists of fraud firms where the CEO was involved in fraud, during the period 1997-2007. Our results show that gray directors do not provide appropriate oversight of management and that limiting the number of multiple directorships they hold is associated with a greater likelihood of fraud occurrence. Lastly, we provide evidence of the importance of having block holder representation on the board in an effort to maintain an additional layer of monitoring and deter CEOs from engaging in fraudulent behavior.
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