Powerful CEOs and Corporate Governance: Evidence from an Analysis of CEO and Director Turnover After Fraud

In this paper, we investigate the consequences of fraud for CEOs and whether these conse-quences depend on CEO power. We find that CEO power can reduce the likelihood of direc-tor turnover as well as CEO turnover after fraud detection. Further, we find that CEO poweris negatively related to long-term stock performance after fraud detection and this negativerelationship is particularly strong for powerful CEOs when the board has a low overall turn-over. These results imply that powerful CEOs can entrench themselves and survive corporateturbulence by potentially working with board members who are favorable to them.