Corporate crime

Mullin, Wallace P.; Snyder, Christopher M.

doi:10.4337/9781781950210.00014

Cited by 5 publications

(4 citation statements)

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“…Procaccia and Winter (2017) explain why this constitutes a different sort of challenge, yet they focus mainly on the problem that a plea bargain with a corporation might let the natural person(s) who committed the crime off the hook, thus reducing employees' incentives to prevent crime. The literature on the economics of corporate crime and enforcement explains how sanctions should be structured to induce corporations to prevent crime and self-report incidents when they happen (Mullin and Snyder 2009;Polinsky and Shavell 2000;Arlen and Kraakman 1997). What we address is the particular trade-off between settlement and court proceedings, a highly relevant matter in corporate bribery cases.…”

Section: Economic Analyses Of Settlement-based Enforcementmentioning

confidence: 99%

Settlements in corporate bribery cases: an illusion of choice?

Søreide

Vagle

2022

Eur J Law Econ

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Despite prosecutors’ difficulties in proving corporate bribery, nearly all enforcement actions end with a settlement at the pretrial stage. Compared to court proceedings, settlement-based enforcement provide prosecutors with flexibility to reward offenders’ self-reporting and cooperation, and reach quicker conclusions to complex cases. In this article, we explain, such enforcement needs regulation to minimize potentially harmful side-effects. When the difference between a court and settlement sanction exceeds a certain size, the alleged offender accepts a settlement regardless of actual responsibility of misconduct. For the prosecutor, the option of offering a lenient settlement means weaker incentives to ascertain the material facts of the case. Society receives less information about the blameworthy act, little opportunity to evaluate the sanction, and less reason to expect sanctions to deter bribery. We show why such consequences result in under-deterrence of bribery and weaker rule of law. The use of settlement may have a self-escalating effect because the enforcement mode can reduce the predictability of the law, while a defendant’s inclination to accept a settlement offer depends on the predictability of the law. Our results suggest that United Kingdom’s current escalation of enforcement of corporate bribery laws will lead to a mixture of settlements and court decisions, while in the United States firms will continue to negotiate settlements as if there were no opportunity to have their cases tested in court.

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Section: Economic Analyses Of Settlement-based Enforcementmentioning

confidence: 99%

Settlements in corporate bribery cases: an illusion of choice?

Søreide

Vagle

2022

Eur J Law Econ

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“…However, this research does not touch on our central point of interest, namely the relationship between competition in product markets and corporate crime. Mullin and Snyder (2009) provide a survey on corporate crime; however, they are primarily concerned with principal-agent considerations with regard to the organization of firms and the question of who should optimally be sanctioned (shareholders, the responsible employee, or both). Our paper abstracts from the fact that there must be an individual wrongdoer in the corporation and the important distinction in that context between individual and corporate liability.…”

Section: Introductionmentioning

confidence: 99%

Competitive Pressure and Corporate Crime

Baumann

Friehe

2015

The B.E. Journal of Economic Analysis &Amp; Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may September 2013Abstract This paper explores the relationship between the intensity of competition in product markets and firms' incentives to lower their production costs by illegal means. Our framework combines a Salop circle with a crime modelà la Becker, allowing us to differentiate between several measures for the intensity of competition. We establish that more firms in the industry (i.e., lower entry costs) reduce the crime rate. Furthermore, whether more intense competition due to the increased substitutability of products raises or lowers the prevalence of criminal behavior can be clearly linked to the impact of such behavior on firms' production costs. Finally, we find that stricter law enforcement may entice more firms to enter the market, despite the higher expected sanction in the event of wrongdoing.

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“…See Mullin and Snyder (2008) for a review. Much of this literature (e.g., Newman and Wright 1990, Macey 1991, Arlen 1994, Chu and Qian 1995, Davis 1996, Arlen and Kraakman 1997, Shavell 1997, Arlen 1998, Garoupa 2000 analyzes the case in which the firm's agent commits a corporate crime in his own, and against the firm's, interest.…”

Section: Literature Reviewmentioning

confidence: 99%

Should Firms be Allowed to Indemnify Their Employees for Sanctions?

Mullin

Snyder

2009

Journal of Law, Economics, and Organization

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Abstract:Policymakers have questioned whether firms should be allowed to indemnify their employees for personal sanctions for corporate crimes. This paper provides the first formal analysis of this form of indemnification. Indemnification should typically not be banned because of the relative benefits it offers to law-abiding firms: insuring employees against the risk of mistaken government prosecution, strengthening employees' resolve to fight meritless suits. Only in limited circumstances do we find banning indemnification to be socially efficient, in particular providing prosecutors with the leverage to adjust the employee's sanction in exchange for his cooperation against the firm.

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Corporate crime

Cited by 5 publications

References 81 publications

Settlements in corporate bribery cases: an illusion of choice?

Settlements in corporate bribery cases: an illusion of choice?

Competitive Pressure and Corporate Crime

Should Firms be Allowed to Indemnify Their Employees for Sanctions?

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