ABSTRACT
This chapter focuses on the population of fraudulent financial misreporting cases that occurred between 1995 and 2005 in Canada among publicly traded firms. It provides a brief overview of prior research on the determinants of financial reporting fraud. Fifteen such firms were identified from the web site of the Ontario Securities Commission (OSC) as having had cease-trading orders accompanied by financial statement refilings or errors. The chapter discovers that almost all sample firms and/or their CEO's were the objects of positive media or analyst coverage in the period preceding or concurrent to the fraudulent activities. Like moths attracted to the flames that ultimately kill them, managers under the spotlight gain in self-assurance and a feeling of invincibility, thus leading them to take more risks in their fraudulent activities. Hayward and Hambrick who provide evidence that vigilant board may be less influenced by managerial hubris, thus attenuating takeover premiums.
