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Family Matters: Exploring the Link Between Parental and Executive Financial Misconduct

Juha Kallunki¹; Juha Kallunki^1,2,3; Wayne R. Landsman⁴; Emma‐Riikka Myllymäki⁵; Lasse Niemi²

¹ Oulu Business School, University of Oulu · ² Aalto University School of Business · ³ Stockholm School of Economics · ⁴ Kenan-Flagler Business School, University of North Carolina at Chapel Hill · ⁵ Audencia Business School

ABSTRACT Using a novel data set of misconduct records for Finnish CEOs and directors and their parents, we explore whether corporate executives’ financial misconduct is associated with similar behavior by their parents. Controlling for various other factors of executive financial misconduct, we find that executives are significantly more likely to engage in financial misconduct, including accounting, tax, and other financial offenses, if their parents have a history of financial misconduct. This intergenerational association is stronger when the parental misconduct is more severe. Additional findings reveal that growing up in high‐misconduct municipalities and cohabiting with spouses who engage in financial misconduct are also associated with a higher likelihood of executive misconduct, indicating that such behaviors may be shaped by broader socialization processes that extend beyond the immediate family. Although our analyses do not establish causal relationships, the collective evidence presented in this study offers insights into why some corporate executives engage in misconduct while others do not.

DOI

10.1111/1475-679x.70028

Volume

64 (2)

Pages

561-632

Language

en

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