This paper investigates the reputational penalties faced by managers of firms that announced earnings restatements in 1997 or 1998. It examines management turnover and the subsequent employment of displaced managers at these firms. The study finds that 60% of restating firms experienced at least one top manager turnover within 24 months of the restatement, compared to 35% among age-, size-, and industry-matched control firms. The subsequent employment prospects of displaced managers from restatement firms are poorer than those from control firms. These results hold after controlling for firm performance, bankruptcy, and other factors influencing management turnover. The findings suggest that both corporate boards and the external labor market impose significant penalties on managers for violating GAAP. The study also highlights that private penalties for GAAP violations may serve as partial substitutes for public enforcement. The paper discusses the importance of monitoring mechanisms and the potential impact of corporate governance on managerial behavior. It also presents results from logistic regression analyses showing that earnings restatements are strongly associated with management turnover, even after controlling for performance and managerial entrenchment. The study concludes that the reputational penalties for aggressive accounting are significant and that the external labor market plays a crucial role in disciplining managers.This paper investigates the reputational penalties faced by managers of firms that announced earnings restatements in 1997 or 1998. It examines management turnover and the subsequent employment of displaced managers at these firms. The study finds that 60% of restating firms experienced at least one top manager turnover within 24 months of the restatement, compared to 35% among age-, size-, and industry-matched control firms. The subsequent employment prospects of displaced managers from restatement firms are poorer than those from control firms. These results hold after controlling for firm performance, bankruptcy, and other factors influencing management turnover. The findings suggest that both corporate boards and the external labor market impose significant penalties on managers for violating GAAP. The study also highlights that private penalties for GAAP violations may serve as partial substitutes for public enforcement. The paper discusses the importance of monitoring mechanisms and the potential impact of corporate governance on managerial behavior. It also presents results from logistic regression analyses showing that earnings restatements are strongly associated with management turnover, even after controlling for performance and managerial entrenchment. The study concludes that the reputational penalties for aggressive accounting are significant and that the external labor market plays a crucial role in disciplining managers.