Incumbent malfeasance is a major challenge in many developing democracies. However, voters often do not punish malfeasant politicians. We develop a simple model showing that electoral accountability requires that the local media market structure incentivize media stations to report incumbent malfeasance to voters. The model’s predictions are tested in Mexico, where we exploit plausibly exogenou...

This article examines the causes of financial malfeasance in the largest U.S. corporations between 1995 and 2004. The findings support organizational-political embeddedness theory, which suggests that differential social structures create dependencies, incentives, and opportunities to engage in financial malfeasance. The historical analysis shows that neoliberal policies enacted between 1986 an...

Incumbent malfeasance is a major challenge in many developing democracies. Our model suggests that electoral accountability requires a media market structure incentivizing local media to report incumbent malfeasance. We test the model’s implications in Mexico, leveraging plausibly exogenous variation in the pre-election release of municipal audits revealing misallocated spending and greater acc...

o compelling justification for democracy is that public officials can be held accountable. elected representatives who betray the public trust by extracting excessive rents are vulnerable to electoral retribution with loss of office. Perhaps surprisingly, however, evidence from a variety of countries documents that elected officials who are charged with or convicted of criminal wrongdoing are t...

While accounting research often uses restatements as a measure of earnings quality (EQ), often overlooked is the explicit recognition that EQ arises endogenously as a by-product of the firm’s value-maximizing investment in accounting resources. This paper develops a model of restatements that incorporates both the optimal investment in accounting systems (i.e., “optimal incompetence”) and incen...