Abstract
In this paper, we explore the effects of regional religiosity on the illegal actions of business executives. In particular, we examine the extent to which agency and institutional theories may be used to explain fraudulent financial reporting and stock options backdating. Our findings indicate that religiosity has a negative influence on illegal corporate activity but that this relationship is actually limited to stock option backdating. Board size and independence are also shown to moderate the relationship between religiosity and illegal corporate activity. This provides support for an institutional theory perspective on mitigating executive opportunism.
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