-based compensation due to the high level of fraud that managers would undertake. The principal findings are (1) fraud can be a sign of …I show that heeding recent calls to reduce agency costs and managerial short-termism may, in fact, lead to more fraud … both effort and some level of fraud. Where agency costs are large, shareholders will be unwilling to award 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 …