We examine how executives' behavior outside the workplace, as measured by their ownership of luxury goods (low "frugality") and prior legal infractions, is related to financial reporting risk. We predict and find that CEOs and CFOs with a legal record are more likely to perpetrate fraud. In...

We study whether the effectiveness of corporate governance mechanisms varies depending on the characteristics of the executives subject to these mechanisms - namely, their “psychological type”, as proxied by their history of legal infractions. In particular, we examine insider trading, where...