The Fraud Goes On: The Effects of Fraud Duration, Victim Organization Type, and Perpetrator Status

Abstract

When occupational fraud is detected, the organization—the victim in the fraud case—decides whether or not to terminate and/or refer the case to law enforcement for possible prosecution. We use survey data collected by the Association of Certified Fraud Examiners (ACFE) to examine the impact of fraud duration, organization type, and perpetrator status on a victim organization’s decision to pursue a particular punishment outcome against the principal perpetrator. We find that fraud duration is an important attribute in determining whether and how victim organizations pursue punishments. Furthermore, fraud duration interacts with victim organization type and with perpetrator status to influence the punishment outcome selected by the victim organization. Our study contributes to the fraud literature by considering the interactions between perpetrator and victim organization characteristics on punishment outcomes and has practical implications for victim organizations and the certified fraud examiners who advise them. Data Availability: Data are available from the Association of Certified Fraud Examiners (ACFE). JEL Classifications: M40; M41; M49; L32; L33.