Abstract
This paper explores the effects of regional religiosity on the illegal financialactions of business executives. In particular, we examine the extent to which agencyand institutional theories may be used to explain fraudulent financial reporting andstock options backdating. Our findings indicate that religiosity has a negative influenceon illegal corporate activity but that this relationship is primarily limited to stockoptions backdating. Board size and independence are also shown to moderate therelationship between religiosity and illegal corporate activity. These results providesupport for an institutional theory perspective on mitigating executive opportunism.
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