Financial misconduct is a significant threat to capital markets, with severe negative consequences for stakeholders. This study explores the role of Chief Audit Executives (CAEs) in mitigating financial misconduct, highlighting their importance in enhancing internal audits and governance processes. Using hand-collected data from S&P 500 companies’ corporate leadership teams, we find that firms with prominent CAEs are less likely to engage in financial misconduct. This relationship is especially pronounced in companies with strong teamwork culture. Entropy balancing, two-stage least-squares (2SLS) procedure, and placebo tests support our results, underscoring the robustness of the findings. This study provides significant implications for corporate governance practices and regulatory policies.

Data Availability: Data are available from the public sources cited in the text.

JEL Classifications: M14; M42; G34.

Keywords:
chief audit executive (CAE), financial misconduct, financial fraud, corporate culture, teamwork
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2025