Corporate financial crime: social diagnosis and treatment

Abstract

Purpose -The purpose of this viewpoint paper is to assist in finding solutions for the growing moral and social issues of financial crime plaguing corporations today. Design/methodology/approach -Methodology includes the synthesis of existing theories in economic sociology and criminology to "diagnose" and "treat" the existing flaws in corporate structures that have led to malaise and malfeasance. Theories include differential association, self-control, and control balance, taking into consideration the characteristics of individuals and corporate structures. Findings -Findings suggest that corporate structure has to be critically scrutinized and changes implemented, including close examination of informal and formal communication and salary structures.Practical implications -This paper suggests concrete strategies and policy changes for regulators, corporate decision makers, and academics. Originality/value -The synthesis of existing theories in white collar malfeasance and crime provides a template to increase corporate social responsibility and promote policy/regulatory changes in the current economic climate.

Corporate Crime Does Pay! The Relationship between Financial Crime and Imprisonment in White-Collar Crime

“…Occupational crime is sometimes labeled elite crime. Hansen (2009) argues that the problem with occupational crime is that it is committed within the confines of positions of trust and in organizations, which prohibits surveillance and accountability. Heath (2008) found that the bigger and more severe occupational crime tends to be committed by individuals who are further up the chain of command in the firm.…”

“…Except in rare cases of mass fraud such as the Enron scandal, not all the elite within a given organization or industry will commit crime. Hence, although the elite at the top of their profession and corporation differentially associate with people of equal status in their own and other corporations, not all corporate elites commit crimes and behave in an overtly deviant manner (Hansen, 2009). Gross (1978) argued in his classical article on the theory of organizational crime that a considerable number of areas of sociology, studies of crime and delinquency usually have a International Letters of Social and Humanistic Sciences Vol.…”

A taxonomy of the 'dark side' of financial innovation: the cases of high frequency trading and exchange traded funds

“…This is likely to be true of the dark side of financial innovation and calls for a wider examination of the context and motivations driving the undesirable consequences. There appears to be no literature that explicitly addresses the motivation question in the context of financial innovation, nevertheless the literature on white collar and financial crime may have some useful lessons (see for instance Hansen, 2009, Nie, 2009, Tibbs et al, 2011. Clearly the main reason for predatory schemes and abuse of financial innovation is personal gain in some way (See Table 1).…”

“…On the more general corporate governance side Nie (2009) finds that firms not involved in securities fraud (versus those that were) tended to have more outsiders on their boards, the management teams had longer tenures and were more likely to own equity in the business. These insights point to corporate governance considerations (see Table 1 and Hansen, 2009) being an important and complementary weapon to regulatory efforts (including punitive sanctions) in the "war" against the dark side of financial innovation.…”

Empirical Differences in Crime Categories by White-Collar Criminals

“…If white-collar crime is defined in terms of the offender, it means crime committed by higher class members of society for personal or organizational gain. They are individuals who are wealthy, highly educated, and socially connected, and they are typically employed by and in legitimate organizations (Hansen, 2009). …”