Ex-Officers on the Board: Military Experience and Corporate Ethics

We examine whether board directors with previous experience as military officers improve corporate ethics. Using information about Korean board directors, we show that firms with ex-military-officer (EMO) CEOs and inside directors are substantially less likely to commit fraud, highlighting the importance of exposure to military values as former officers while serving as corporate executives. The positive impact of EMO directors' presence on corporate ethics is particularly prominent among Korean business group (chaebol) firms that are otherwise prone to fraudulent behaviors without their presence. Our results suggest that firms with board members of heightened personal integrity from their military officer experience have a higher standard in corporate ethics.