Some of the more critical findings of the study are:

• Financial fraud affects companies of all sizes, with the median company having assets and revenues just under $100 million.
• The median fraud was $12.1 million. More than 30 of the fraud cases each involved misstatements/misappropriations of $500 million or more.
• The SEC named the CEO and/or CFO for involvement in 89% of the fraud cases. Within two years of the completion of the SEC investigation, about 20% of CEOs/CFOs had been indicted. Over 60% of those indicted were convicted. Over 80% of the CEOs/CFOs left the company within two years. In 47% of the cases, the SEC barred one or more individuals from serving as an officer or director of a public company. Civil fines were imposed in 65% of the cases, and disgorgements were imposed in 43%.
• The average fraud period extended 31.4 months (median 24 months).
• The two most common techniques used to fraudulently misstate the financial statements involved improper revenue recognition (61% of the cases) and asset overstatements primarily by overvaluing existing assets or capitalising expenses (51%). Understating expenses and liabilities occurred in 31% of the cases.
• Many of the commonly observed board of director and audit committee characteristics such as size, meeting frequency, composition, and experience do not differ meaningfully between fraud and no-fraud companies. Recent corporate governance regulatory efforts appear to have reduced variation in observable board-related governance characteristics.
• Virtually all of the fraud firms received an unqualified audit opinion on the last set of fraudulently misstated financial statements. However, the unqualified audit report of fraud firms was more likely (56%) to contain additional explanatory language than for no-fraud firms (36%).
• Twenty-six percent of the firms engaged in fraud changed auditors during the period examined compared to a 12% rate for no-fraud firms.
• Initial news in the press of an alleged fraud resulted in an average 16.7% abnormal stock price decline for the fraud company in the two days surrounding the announcement.
• News of an SEC or Department of Justice investigation resulted in an average 7.3% abnormal stock price decline.
• Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or material asset sales at rates much higher than those experienced by no-fraud firms.