Pub Date : 2018-04-28DOI: 10.4337/9781783474479.00021
Vikramaditya S. Khanna
This chapter reviews the empirical literature on the factors related to the likelihood and detection of corporate wrongdoing, which increasingly focuses on internal governance, and examines calls to split the traditional tasks of the General Counsel (GC) between the GC and a Chief Compliance Officer (CCO) who reports directly to the Board. The reason for this is to have more independence and expertise in compliance matters than the GC’s office traditionally provides. This chapter argues that although independence is often valuable in reducing wrongdoing, in this context, it is likely to come with additional costs that may make gathering information on wrongdoing more difficult. In particular, some employees may be more reluctant to provide information as easily to a CCO than to the GC and this might sometimes result in increased wrongdoing and weaker operating performance. These deleterious effects, however, might be somewhat ameliorated by institutional and governance design adjustments. This chapter examines what factors may drive likely outcomes and finds that further empirical inquiry would be valuable and suggests some ways in which future research might engage in this inquiry.
{"title":"An Analysis of Internal Governance and the Role of the General Counsel in Reducing Corporate Crime","authors":"Vikramaditya S. Khanna","doi":"10.4337/9781783474479.00021","DOIUrl":"https://doi.org/10.4337/9781783474479.00021","url":null,"abstract":"This chapter reviews the empirical literature on the factors related to the likelihood and detection of corporate wrongdoing, which increasingly focuses on internal governance, and examines calls to split the traditional tasks of the General Counsel (GC) between the GC and a Chief Compliance Officer (CCO) who reports directly to the Board. The reason for this is to have more independence and expertise in compliance matters than the GC’s office traditionally provides. This chapter argues that although independence is often valuable in reducing wrongdoing, in this context, it is likely to come with additional costs that may make gathering information on wrongdoing more difficult. In particular, some employees may be more reluctant to provide information as easily to a CCO than to the GC and this might sometimes result in increased wrongdoing and weaker operating performance. These deleterious effects, however, might be somewhat ameliorated by institutional and governance design adjustments. This chapter examines what factors may drive likely outcomes and finds that further empirical inquiry would be valuable and suggests some ways in which future research might engage in this inquiry.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133578059","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper aims to elaborate on the theory of fraud by enhancing the existing theories behind the factors that force people to commit fraud. The paper reviews the most commonly used and widely accepted models for explaining why people commit fraud - the Fraud Triangle, the Fraud Diamond, the Fraud Scale and the MICE model. The author argues that these models need to be updated to adapt to the current developments in the field and the ever growing fraud incidents, both in frequency and severity, and builds on the theoretical background to create a new model so as to enhance the understanding behind the major factors which lead to the commitment of fraud. The author identifies a major element - Ego - which plays a crucial role in compelling people to commit fraud and concludes in the formation of the S.C.O.R.E. model, which is graphically depicted in the Fraud Pentagon. He goes further by adding the factor collusion in order to better apply in cases of white-collar crimes. The overall contribution of this paper is the development of the S.C.O.R.E. model in order to contribute to the development of fraud theory by identifying the key factors that play a major role in whether fraud will actually occur and acting as a theoretical benchmark for all future reference.
{"title":"Elaborating on the Theory of Fraud. New Theoretical Extensions","authors":"G. Vousinas","doi":"10.2139/ssrn.3163337","DOIUrl":"https://doi.org/10.2139/ssrn.3163337","url":null,"abstract":"This paper aims to elaborate on the theory of fraud by enhancing the existing theories behind the factors that force people to commit fraud. The paper reviews the most commonly used and widely accepted models for explaining why people commit fraud - the Fraud Triangle, the Fraud Diamond, the Fraud Scale and the MICE model. The author argues that these models need to be updated to adapt to the current developments in the field and the ever growing fraud incidents, both in frequency and severity, and builds on the theoretical background to create a new model so as to enhance the understanding behind the major factors which lead to the commitment of fraud. The author identifies a major element - Ego - which plays a crucial role in compelling people to commit fraud and concludes in the formation of the S.C.O.R.E. model, which is graphically depicted in the Fraud Pentagon. He goes further by adding the factor collusion in order to better apply in cases of white-collar crimes. The overall contribution of this paper is the development of the S.C.O.R.E. model in order to contribute to the development of fraud theory by identifying the key factors that play a major role in whether fraud will actually occur and acting as a theoretical benchmark for all future reference.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127670912","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-01-01DOI: 10.4337/9781783474479.00011
C. Alexander, Jennifer H. Arlen
Critics of deferred prosecution agreements claim they undermine deterrence by lowering the cost to firms from reputational damage or stigma resulting from a criminal settlement. We evaluate whether the choice between a DPA and a guilty plea affects the cost to corporations of reputational damage arising from the reactions of interested outsiders – e.g., customers and suppliers – to the settlement, holding constant other factors such as the offender and offense magnitude. We introduce a framework for this purpose in which differences in the qualitative information that is released at settlement may cause differences in outsider reaction and, thus, the firm’s cost of reputational damage. We review the contents of the DPA and plea agreements and find no differences in the information they directly convey to interested outsiders that would cause differences in the expected cost of reputational damage to the firm. We then identify three channels through which the choice of settlement form might indirectly signal information to outsiders: direct revelation, prosecutorial selection, and managerial selection. The differences in the information that interested outsiders may receive through these channels according to the form of settlement appear unlikely to cause differences in the expected costs of reputational damage between DPA and plea to firms at settlement, however. We then turn to the impact of DPAs on the ability of federal agencies acting as interested outsiders to protect their interests by excluding or delicensing a firm whose criminal settlement reveals that it presents an enhanced risk of causing future harm to the agencies’ interests that is best addressed by exclusion instead of by mandated reforms. We conclude that agencies may be better able to serve their interests as interested outsiders when prosecutors employ DPAs than pleas because DPAs leave many agencies free to use permissive exclusion and enable them to exclude when, but only when, appropriate.
{"title":"Does Conviction Matter? The Reputational and Collateral Effects of Corporate Crime","authors":"C. Alexander, Jennifer H. Arlen","doi":"10.4337/9781783474479.00011","DOIUrl":"https://doi.org/10.4337/9781783474479.00011","url":null,"abstract":"Critics of deferred prosecution agreements claim they undermine deterrence by lowering the cost to firms from reputational damage or stigma resulting from a criminal settlement. We evaluate whether the choice between a DPA and a guilty plea affects the cost to corporations of reputational damage arising from the reactions of interested outsiders – e.g., customers and suppliers – to the settlement, holding constant other factors such as the offender and offense magnitude. We introduce a framework for this purpose in which differences in the qualitative information that is released at settlement may cause differences in outsider reaction and, thus, the firm’s cost of reputational damage. We review the contents of the DPA and plea agreements and find no differences in the information they directly convey to interested outsiders that would cause differences in the expected cost of reputational damage to the firm. We then identify three channels through which the choice of settlement form might indirectly signal information to outsiders: direct revelation, prosecutorial selection, and managerial selection. The differences in the information that interested outsiders may receive through these channels according to the form of settlement appear unlikely to cause differences in the expected costs of reputational damage between DPA and plea to firms at settlement, however. We then turn to the impact of DPAs on the ability of federal agencies acting as interested outsiders to protect their interests by excluding or delicensing a firm whose criminal settlement reveals that it presents an enhanced risk of causing future harm to the agencies’ interests that is best addressed by exclusion instead of by mandated reforms. We conclude that agencies may be better able to serve their interests as interested outsiders when prosecutors employ DPAs than pleas because DPAs leave many agencies free to use permissive exclusion and enable them to exclude when, but only when, appropriate.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133634331","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper introduces an architecture of fraud in accounting by explicating the nature of fraud in the accounting environment, providing some theoretical explanations of the phenomenon from the field of criminology, and exploring some outcome situations arising from corporate fraud.
{"title":"The Architecture of Fraud in the Accounting Environment","authors":"A. Riahi‐Belkaoui","doi":"10.2139/ssrn.3065381","DOIUrl":"https://doi.org/10.2139/ssrn.3065381","url":null,"abstract":"This paper introduces an architecture of fraud in accounting by explicating the nature of fraud in the accounting environment, providing some theoretical explanations of the phenomenon from the field of criminology, and exploring some outcome situations arising from corporate fraud.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"233 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123038372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This chapter examines the nature of optimal price fixing penalties on organizations in the presence of criminal sanctions for individuals employed by convicted firms. In other work, we examined the nature of optimal penalties for firms convicted for price fixing when the only sanction is the one placed on the firm. This chapter expands the economic analysis to examine how optimal organizational sanctions function when individuals employed by the firm are subject to criminal penalties, including incarceration. Our analysis demonstrates how sanctions on individuals can serve to complement firm level expenditures on monitoring and compliance, resulting in better deterrence and lower compliance costs.
{"title":"The Effect of Optimal Penalties for Organizations Convicted of Price Fixing in the Presence of Criminal Sanctions for Individuals","authors":"Bruce H. Kobayashi, Michelle M. Burtis","doi":"10.2139/ssrn.3033281","DOIUrl":"https://doi.org/10.2139/ssrn.3033281","url":null,"abstract":"This chapter examines the nature of optimal price fixing penalties on organizations in the presence of criminal sanctions for individuals employed by convicted firms. In other work, we examined the nature of optimal penalties for firms convicted for price fixing when the only sanction is the one placed on the firm. This chapter expands the economic analysis to examine how optimal organizational sanctions function when individuals employed by the firm are subject to criminal penalties, including incarceration. Our analysis demonstrates how sanctions on individuals can serve to complement firm level expenditures on monitoring and compliance, resulting in better deterrence and lower compliance costs.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-09-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131772755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Panama Papers showed that financial crimes such as money laundering, corruption or tax evasion are alive and kicking. They flourish thanks to secrecy that allows criminals to hide behind opaque companies and trusts. For example, some countries allow bearer shares or they do not require all types of entities to register in a commercial register for them to legally exist. Or, even if all entities have to register, not all types of shareholders and members have to be disclosed. This means that entities may operate in the economy (e.g. opening a bank account) even if their full ownership information is not available in a commercial register. In most countries, however, most legal entities (e.g. companies, but not trusts) do have to register in a commercial register. Nevertheless, they generally only have to disclose their legal owners (e.g. a nominee or an offshore company), but not their beneficial owners (BOs), meaning the individual ultimately owning or controlling the entity. The process to incorporate an entity is usually done in person and on paper at the commercial register. Two current - but opposing - trends are changing this. The negative trend is that commercial registries are moving online, making it easier and faster to create companies remotely via the internet, where very little legal ownership information is required, if any. This increases secrecy levels around companies and facilitates financial crimes even further. The positive - but still insufficient - trend is that some countries, especially in Europe, are starting to “upgrade” their commercial registries to require legal entities (and some trusts) to also register their BOs. However, this positive trend is not good enough because it is still simple to provide false or inaccurate BO information when registering the entity. Civil society organisations are therefore calling for a more effective combination of both trends: in other words, to upgrade all commercial registries so that they do require BO information of companies and trusts, and to have this information digital and in open data format to make it easier to search for it and check its accuracy and truthfulness. In order to reduce the options for those who would want to provide false or inaccurate BO information, this paper proposes that the same technology already available and deployed in the private sector (e.g. cross-checking, big data and artificial intelligence used by credit card companies to prevent fraudulent online purchases) should also be used in these digital commercial registries. In addition, access to this BO information must be public and in open data format, in order to create a deterrent effect. Even once this technology is applied, if access to digitalised BO information is restricted to authorities, it is less likely to ensure the accuracy of the information since neither civil society nor journalists can use their resources to check the information. We have to consider the possibility that
{"title":"Technology and Online Beneficial Ownership Registries: Easier to Create Companies and Better at Preventing Financial Crimes","authors":"Andres Knobel","doi":"10.2139/SSRN.2978757","DOIUrl":"https://doi.org/10.2139/SSRN.2978757","url":null,"abstract":"The Panama Papers showed that financial crimes such as money laundering, corruption or tax evasion are alive and kicking. They flourish thanks to secrecy that allows criminals to hide behind opaque companies and trusts. For example, some countries allow bearer shares or they do not require all types of entities to register in a commercial register for them to legally exist. Or, even if all entities have to register, not all types of shareholders and members have to be disclosed. This means that entities may operate in the economy (e.g. opening a bank account) even if their full ownership information is not available in a commercial register. \u0000In most countries, however, most legal entities (e.g. companies, but not trusts) do have to register in a commercial register. Nevertheless, they generally only have to disclose their legal owners (e.g. a nominee or an offshore company), but not their beneficial owners (BOs), meaning the individual ultimately owning or controlling the entity. The process to incorporate an entity is usually done in person and on paper at the commercial register. \u0000Two current - but opposing - trends are changing this. \u0000The negative trend is that commercial registries are moving online, making it easier and faster to create companies remotely via the internet, where very little legal ownership information is required, if any. This increases secrecy levels around companies and facilitates financial crimes even further. \u0000The positive - but still insufficient - trend is that some countries, especially in Europe, are starting to “upgrade” their commercial registries to require legal entities (and some trusts) to also register their BOs. However, this positive trend is not good enough because it is still simple to provide false or inaccurate BO information when registering the entity. \u0000Civil society organisations are therefore calling for a more effective combination of both trends: in other words, to upgrade all commercial registries so that they do require BO information of companies and trusts, and to have this information digital and in open data format to make it easier to search for it and check its accuracy and truthfulness. \u0000In order to reduce the options for those who would want to provide false or inaccurate BO information, this paper proposes that the same technology already available and deployed in the private sector (e.g. cross-checking, big data and artificial intelligence used by credit card companies to prevent fraudulent online purchases) should also be used in these digital commercial registries. \u0000In addition, access to this BO information must be public and in open data format, in order to create a deterrent effect. Even once this technology is applied, if access to digitalised BO information is restricted to authorities, it is less likely to ensure the accuracy of the information since neither civil society nor journalists can use their resources to check the information. We have to consider the possibility that","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121871986","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Phoenix activity occurs where the business of a failed company is transferred to a second (typically newly incorporated) company and the second company’s controllers are the same as the first company’s controllers. Phoenix activity can be legal as well as illegal. Phoenix activity is illegal where the controllers’ intention is to shift assets from the predecessor company to the successor company to avoid liabilities such as unsecured debts, employee entitlements, taxes, adverse court judgments and fines. Phoenix activity has become a significant concern for governments because of the number of individuals promoting illegal phoenix activity, the significant loss of tax revenue it causes, and the recognition of the potentially devastating impact it has on creditors and employees. This report is the third by the authors dealing with phoenix activity. The first report examines the various historical attempts to define phoenix activity and identifies five categories of phoenix activity ranging from legitimate business rescue to complex illegal phoenix activity and provides examples of each. The second report captures all available data relating to the incidence, cost and enforcement of laws dealing with illegal phoenix activity. In this report, the authors propose reforms aimed at better detection, disruption, punishment and deterrence of illegal phoenix activity.
{"title":"Phoenix Activity: Recommendations on Detection, Disruption and Enforcement","authors":"H. Anderson, I. Ramsay, M. Welsh, Jasper Hedges","doi":"10.2139/SSRN.2924277","DOIUrl":"https://doi.org/10.2139/SSRN.2924277","url":null,"abstract":"Phoenix activity occurs where the business of a failed company is transferred to a second (typically newly incorporated) company and the second company’s controllers are the same as the first company’s controllers. Phoenix activity can be legal as well as illegal. Phoenix activity is illegal where the controllers’ intention is to shift assets from the predecessor company to the successor company to avoid liabilities such as unsecured debts, employee entitlements, taxes, adverse court judgments and fines. Phoenix activity has become a significant concern for governments because of the number of individuals promoting illegal phoenix activity, the significant loss of tax revenue it causes, and the recognition of the potentially devastating impact it has on creditors and employees. This report is the third by the authors dealing with phoenix activity. The first report examines the various historical attempts to define phoenix activity and identifies five categories of phoenix activity ranging from legitimate business rescue to complex illegal phoenix activity and provides examples of each. The second report captures all available data relating to the incidence, cost and enforcement of laws dealing with illegal phoenix activity. In this report, the authors propose reforms aimed at better detection, disruption, punishment and deterrence of illegal phoenix activity.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124103888","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
No other State is as vulnerable to Zappers as is the State of New Hampshire. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in New Hampshire. Seen from a global perspective however, it seems unlikely that they are not here.New Hampshire’s fiscal vulnerability to Zappers comes from its heavy reliance on precisely the industry segment that has been found to be the “hot bed” of this fraud – the restaurant industry. In the most recent fiscal year the Meals and Room Tax (M&RT) trailed only the Business Profits Tax (BPT) in revenue yield ($206,726 to $317,439 million). Taxes on meals approximate 70% of the M&RT. As a result, when tax fraud arises in this industry segment it is a significant concern.
{"title":"Zappers - Technological Tax Fraud in New Hampshire","authors":"R. T. Ainsworth","doi":"10.2139/SSRN.2851110","DOIUrl":"https://doi.org/10.2139/SSRN.2851110","url":null,"abstract":"No other State is as vulnerable to Zappers as is the State of New Hampshire. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in New Hampshire. Seen from a global perspective however, it seems unlikely that they are not here.New Hampshire’s fiscal vulnerability to Zappers comes from its heavy reliance on precisely the industry segment that has been found to be the “hot bed” of this fraud – the restaurant industry. In the most recent fiscal year the Meals and Room Tax (M&RT) trailed only the Business Profits Tax (BPT) in revenue yield ($206,726 to $317,439 million). Taxes on meals approximate 70% of the M&RT. As a result, when tax fraud arises in this industry segment it is a significant concern.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116687346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Law makers increasingly try to capitalize on individuals having acquired knowledge of corporate crimes or other misconduct by inducing them to blow the whistle. In a laboratory experiment we measure the effectiveness of incentives on the willingness to report such misconduct to a sanctioning authority. We find that fines for non-reporting insiders, rewards and even simple commands increase the probability of whistleblowing. We find the strongest effect for fines. Situational determinants also influence the willingness to blow the whistle: Insiders who are negatively affected by the misconduct are more likely to blow the whistle than non-affected or profiting insiders. Those (negatively affected) victims are also sensitive to the misconduct's impact on the authority sanctioning the misconduct (public authority or employer): Whistleblowing is more likely if the enforcement authority is negatively affected compared to positively or not affected.
{"title":"Whistleblowing: Incentives and Situational Determinants","authors":"Klaus Ulrich Schmolke, Verena Utikal","doi":"10.2139/ssrn.2820475","DOIUrl":"https://doi.org/10.2139/ssrn.2820475","url":null,"abstract":"Law makers increasingly try to capitalize on individuals having acquired knowledge of corporate crimes or other misconduct by inducing them to blow the whistle. In a laboratory experiment we measure the effectiveness of incentives on the willingness to report such misconduct to a sanctioning authority. We find that fines for non-reporting insiders, rewards and even simple commands increase the probability of whistleblowing. We find the strongest effect for fines. Situational determinants also influence the willingness to blow the whistle: Insiders who are negatively affected by the misconduct are more likely to blow the whistle than non-affected or profiting insiders. Those (negatively affected) victims are also sensitive to the misconduct's impact on the authority sanctioning the misconduct (public authority or employer): Whistleblowing is more likely if the enforcement authority is negatively affected compared to positively or not affected.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132080419","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines whether the massive Chinese anticorruption campaign ensnares corrupt firms, contains a political component, and reduces corporate corruption. Consistent with the campaign’s stated objectives, investigated executives are more likely to come from Chinese firms with characteristics commonly associated with measures of poor governance, self-dealing, and inefficiencies. However, affiliations with prominent investigated political leaders increase investigation likelihood, while university affiliations with current central leadership decrease investigation likelihood, possibly indicating political partiality. Except for reported entertainment expenditures and chief executive officer pay, there has been little evidence of a substantial overall decrease in measures of potential corporate corruption. This paper was accepted by Tomasz Piskorski, finance.
{"title":"Is the Chinese Anti-Corruption Campaign Authentic? Evidence from Corporate Investigations","authors":"J. Griffin, Clark Liu, Tao Shu","doi":"10.2139/SSRN.2779429","DOIUrl":"https://doi.org/10.2139/SSRN.2779429","url":null,"abstract":"This paper examines whether the massive Chinese anticorruption campaign ensnares corrupt firms, contains a political component, and reduces corporate corruption. Consistent with the campaign’s stated objectives, investigated executives are more likely to come from Chinese firms with characteristics commonly associated with measures of poor governance, self-dealing, and inefficiencies. However, affiliations with prominent investigated political leaders increase investigation likelihood, while university affiliations with current central leadership decrease investigation likelihood, possibly indicating political partiality. Except for reported entertainment expenditures and chief executive officer pay, there has been little evidence of a substantial overall decrease in measures of potential corporate corruption. This paper was accepted by Tomasz Piskorski, finance.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122718658","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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