From Journal of Accounting and Economics: Employees at firms involved in fraudulent financial reporting experience significant negative outcomes, losing approximately 50% of their cumulative annual wages compared to a matched sample, with higher turnover rates following fraud periods.

Despite this, employment growth remains positive during the fraud periods as these firms tend to hire new, lower-paid workers, contrary to firms in distress that typically reduce their workforce.

When fraud is revealed, these firms subsequently lay off employees, exacerbating wage losses, especially for lower-wage employees in thin labor markets.