Do They Do It For The Money?

Bhattacharya, Utpal; Marshall, Cassandra D.

doi:10.2139/ssrn.1356118

Cited by 6 publications

(3 citation statements)

References 14 publications

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“…At the same time, however, representatives tend to be very wealthy individuals and the amounts involved might raise the question why politicians would want to go against constituent or special interests to recover a relatively small proportion of their personal wealth. Nevertheless, similar behavior has been documented in the context of executives committing white collar crimes (Levitt and Dubner 2005;Levitt 2006;Bhattacharya and Marshall 2009) inasmuch as the pecuniary gains from such acts also tend to be small compared to the wealth of these managers. 4 We also show that it is the representatives' investments in financial institutions headquartered outside of their home states that explain their vote.…”

supporting

confidence: 58%

Personal Wealth Interests of Politicians and Government Intervention in the Economy: The Bailout of the US Financial Sector

Tahoun

Lent

2010

SSRN Journal

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We examine whether the incentives derived from equity ownership affect politicians' decisions about government intervention in the economy. We investigate this question in the context of the government's support to financial institutions under the Emergency Economic Stabilization Act (EESA). We find that the equity ownership of members of the House of Representatives, but not the Senate, is positively associated with voting in favor of key legislative proposals to bailout the financial sector. We show that the effect that equity ownership has on voting likely reflects a politician's personal wealth interests and is separate and distinct from other economic incentives that derive from constituent and special interests. In a sample of 555 publicly listed financial institutions, we also find that the equity ownership of Congress members seated on financial sector-related committees is positively associated with both the amount of bailout these institutions receive, as well as the timing of that bailout. We can attribute this finding to the investments of the chairpersons and ranking members of these committees.

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supporting

confidence: 58%

Personal Wealth Interests of Politicians and Government Intervention in the Economy: The Bailout of the US Financial Sector

Tahoun

Lent

2010

SSRN Journal

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“…Vroom and Pahl (1971) find a negative relation between age and risk taking while according to MacCrimmon and Wehrung (1990), more mature executives are the most risk averse. In terms of the economic costs and benefits of white collar crime, Bhattacharya and Marshall (2012) predict that younger management have more to lose in terms of income, reputation and future prospects, and lower the likelihood of illegal insider trading. However, they found more young management being indicted for insider trading.…”

Section: Late Reporting and Risk Taking Behaviormentioning

confidence: 99%

“…Guilt, anticipated gains, cynicism and perceptions of fairness of law influence the intention to trade on inside information (Beams, Brown and Killough, 2003). According to Bhattacharya and Marshall (2012), 'richer' top management tend to engage more in illegal insider trading activity. Specifically, we investigate whether an insider's characteristics such as age, tenure within the firm and wealth linked to the firm in the form of equity based compensation and stockholdings affect the likelihood of late reporting.…”

Section: Introductionmentioning

confidence: 99%

Late Disclosure of Insider Trades: Who Does It and Why?

Chang

Lim

2014

J Bus Ethics

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We attempt to understand the personal incentives that motivate corporate insiders to engage in unethical behavior such as delayed trade disclosure. Delayed disclosure affects corporate transparency and other shareholders in the firm potentially suffer investment losses because they are unaware of insiders' activities. Using archival data from the 300 largest Australian firms between 2007 and 2011, the results show that risk factors such as insider age and tenure and wealth effects in the form of insider shareholdings affect the likelihood of delayed reporting. Governance positions such as committee membership mitigate this behavior. Our study highlights the importance of considering individual insider's wealth and risk factors. The selfmonitoring role of governance positions is also indicative of the effectiveness of internal corporate governance in the prevention of illegal insider behavior.

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