The article argues that firm-level liability for fraud is justified by the need to secure the cooperation of the firm in pursuing individual wrongdoers ex post rather than in controlling top-level officers ex ante. Firm-level liability for fraud has often been criticized. The empirical evidence...

Under the dominant account, fraudulent financial reporting by public firms harms the firms' shareholders and, more generally, capital markets. This Article contends that the account is incomplete. In addition to undermining investor confidence, misreporting distorts economic decision-making by...