Anecdotal evidence suggests that top managers of firms that are investigated or charged with criminal fraud lose their jobs. From a theoretical perspective, it is plausible that fraud scandals create incentives to change managers, in an attempt to improve the firm's performance, reinvest in lost...

Press reports of procurement fraud investgations, indictments, and suspensions are associated with significantly negative average abnormal returns in the stocks of affectd firms. Abnormal stock returns are significantly less negative, however, for firms ranking among the top 100 defense...