accounting fraud before the fraud is publicly revealed as well as the economic impacts of such rating actions. We find that … Standard & Poor's (S&P), an issuer-paid rating agency, downgrades fraud firms and puts them on negative credit watch as early … as four quarters prior to public fraud revelation, controlling for firms' economic fundamentals and performance …

serious misreporting (“fraud”). We find, compared to a matched sample, that fraud firms' employee wages decline by 9% and the … separation rate is higher by 12% during and after fraud periods. Employment growth at fraud firms is positive during fraud … thick labor markets, bankruptcy and non-bankruptcy firms, worker movements, pre-fraud wage levels, and period of hire …