In the media, the so-called cum/ex trades were addressed as the biggest tax robbery in history. In a few years, the financial trading scheme caused an estimated damage to European state treasuries of ca. 50 billion euros. Through highly complex transactions, a network of equity traders, banks,...

Large companies are increasingly on trial. Over the last decade, many of the world's biggest firms have been embroiled in legal disputes over corruption charges, financial fraud, environmental damage, taxation issues or sanction violations, ending in convictions or settlements of record-breaking...

Organized crime reinforces its corrupting influence on politics through violent intimidation. Anti-crime measures that increase the cost of corruption but not of the exercise of violence might accordingly lead mafia-style organizations to retaliate by resorting to violence in lieu of bribery. On...

In some cases, accounting firms and individual auditors will be punished by the China Securities Regulatory Commission (CSRC) for involvement in the violations of their client companies. Taking the enforcement actions against listed companies and accounting firms of the CSRC from 2006 to 2019 as...

Crimes have been committed since centuries. A change which has however been noticed is the types of crime that are being committed in the present time in contrast to the crimes that very probably committed a few decades or probably a few centuries back in time. It is a human tendency to...

The purpose of this study is to apply the Fraud Diamond theory to an academic context. It investigates the relationship between the prevalence of academic fraud and university students’ perceptions of its severity. We found that the more students (n = 1,032) reported that they engaged in...

This paper investigates the role of financial literacy overconfidence in investment fraud victimization using the data of a nationally representative survey in China. We find that male, wealthy, and educated respondents tend to be more confident about their financial knowledge. Moreover,...

Although firms are encouraged by the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) to conduct internal investigations following financial misconduct, prior research finds few benefits for investigating firms. This study examines a novel aspect of internal...

We build a theoretical framework for cross-border fraud in which international fraud complaints follow a gravity model. Using several large databases of consumer complaints, we find that complaints exhibit gravity; compared to trade volumes, cultural distance is more important for complaints and...

We investigate tax fraud in a major export-promotion program in India -- the Duty Drawback scheme -- which enables exporting firms to claim a cash rebate proportional to the value of their exports, at a product-specific drawback rate. We detect fraud based on two approaches. First, we show that...

We examine the effect of insider share pledges on corporate fraud. We find a positive, causal relation between share pledges by controlling shareholders and detected corporate fraud. Firms whose controlling shareholders pledge have longer fraud detection cycles and receive lighter punishments....

We estimate a structural model of borrowing and lending in the illegal money lending market using a unique panel survey of 1,090 borrowers taking out 11,032 loans from loan sharks. We use the model to evaluate the welfare effects of alternative law enforcement strategies. We find that a large...

The “sufficient writing” requirements of the Statute of Frauds were formulated with bargain-based contracts in mind. It is often difficult if not impossible for persons to meet those requirements for reliance-based contracts, since this would require them to produce a writing signed by the...

Researchers in finance and accounting recently find that male CEOs’ high facial masculinity (fWHR: facial width-to-height ratio), which is known to be related to aggressiveness to achieve higher social status in the neuroendocrinology literature, shows dual impacts on corporate outcomes. For...

This paper explores how issues and malfeasances relating to cybersecurity and cyber fraud differ based on gender, primarily focusing on women in relation to use of mobile-phone centric digital financial services (DFS) in developing countries in Africa and South Asia.We find that women within the...

This paper examines the effects of controlling shareholders on corporate fraud. Using a sample of Chinese listed firms for 2004-2019, we find that the absence of an ultimate controlling shareholder increases the risk of corporate fraud. We use an instrumental variable approach to alleviate the...

Unexplained consumption leakages are a long-standing problem causing significant economic losses to utility distribution companies. In utilities, the Machine Learning techniques enable the automated analysis of consumption patterns, allowing the identification of fraudulent activities, thus...

The literature provides mounting evidence that top managers are associated with financial reporting outcomes. In this paper, I predict and find that traits of rank-and-file employees also explain these outcomes. Controlling for the CEOs’ criminal records, firms with more employees with...

Abstract. This study empirically investigates the relationship between independent directors’ cash compensation and the likelihood of corporate fraud. Using data of 2542 Chinese firms and 17239 firm years from 2010 to 2017, the findings of logistic regression, firm-fixed effects, instrumental...

Fraud has been evolving and increasing with the change in the work environment, organizational structures, industrialization, and legislation. Money, greed, manipulation, job pressures, family needs, opportunity, politics, rationalization are the crucial reasons that lead people to behave...

The public debate on mandating gender representation on boards of directors in the United States is close to a boiling point. California introduced a mandatory quota in 2018 and the Nasdaq Stock Market followed suit with new diversity rules in 2021 for all corporations listed on the exchange....

Economic criminality is a criminal activity that violates the economic and property values of the state, harms the public budget, and causes losses to economic entities, harms society in general. Combating and preventing this criminal activity that takes on transnational crime dimensions...

Purpose: This paper is to provide valuable notes for internal auditors. We know that corporate governance is about the way in which boards oversee the running of an organisation, and how board members are in turn accountable to the organisation’s stakeholders. This has implications for the...

Ziel dieses Working Papers ist die Betrachtung spezifischer Besonderheiten der Wirtschaftskriminalität in der DDR. Diese wird in die wirtschaftlichen und rechtlichen Rahmenbedingungen eingeordnet. Es werden Schlussfolgerungen für die Bedeutung der dargestellten Aspekte für die aktuelle...

For decades, illicit economies have predominantly been studied and debated as a security problem with social and development consequences. However, the interaction between illicit economies and the environment, in cases such as illicit drug crop cultivation and drugs production, is more recent...

We propose a new theory of the firm based on the premise that "the firm" characterizes a factor-integrative form of doing business that is often the most effective and efficient structure for doing well by doing bad. We define the terms and requirements involved for such a theory, and fulfill...

Economic and financial crime is closely related to the changes and the development of societies. In this paper, we question whether the types of economic and financial crimes change as the society develops or not. For our purpose, we use the sample of 27 European Union member countries, for the...

Counterparty risk in the form of investment fraud damages a retiree’s nest egg. Does fraud negatively impact portfolios that are both stock and bond-heavy equally? This study uses Monte Carlo analysis within the Trinity Study framework to determine the average reduction in portfolio success of...

We investigate the role of the regulatory environment and the press freedom in detecting corporate fraud . We study 1,242 internal frauds from 79 countries during the period of 2011-2019. The importance of regulation is assessed by splitting the sample into the highly regulated and monitored...

In the middle of the pandemic crisis, journalists revealed thousands of suspicious activity reports, showing how banks have been profiting from facilitating criminal activities around the world, offering what has been defined as “an unprecedented view of global financial corruption”.The...

Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a quasi-experiment, we found evidence of spillover effects across contexts. We identified fraudsters and...

Many innovative small and medium enterprises (SMEs) face unique challenges in protecting their intellectual property (IP). Potential theft of trade secrets is a key feature of these challenges, which arises often in the context of disputes related to employee mobility. Despite the risks these...

This article focuses on counsel's liability exposure when his or her client engages in fraudulent conduct. The article begins by addressing the pertinent ethical rules promulgated by the American Bar Association (ABA). Thereafter, the discussion provides an analysis of the pertinent case law...

This study empirically tests whether financial fraud can weaken the direct effect of Corporate Social Responsibility (CSR) on the firm’s value. CSR Proxies are fourth-generation Initiative Global Reporting, religiosity, philanthropy, Voluntary Environmental Disclosure Index, and ISO 26000. The...

This paper studies sabotage in a contest with non-identical players. Unlike previous papers, we consider sabotage in an elimination contest and allow contestants to sabotage a potential or future rival. It turns out that for a certain partition of players there is a pure-strategy equilibrium in...

Tournament incentive schemes offer payments dependent on relative performance and thereby are intended to motivate agents to exert productive effort. Unfortunately, however, an agent may also be tempted to destroy the production of his competitors in order to improve the own relative position....

We study the socially optimal design of forest royalty and enforcement instruments in the case where concessions are allocated by a government, illegal logging incentives are present, and the government has available both area-based and value-based royalty instruments. When harvesters are risk...

The main goal of this article is to clarify the nature of criminal proceedings and its relationship to civil litigation, insolvency and tax proceedings. The understanding of the purpose of the proceedings, the nature of the liability fulfilled in the proceedings and the principles on which the...

Publicity from recent scandals has generated increased discussion of the role of business schools in teaching students about ethical behavior. The business ethics literature reveals that business schools can be effective in changing student attitudes towards business ethics. The approach used in...