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Agency theory and financial crime: the paradox of the opportunistic executive

Michel Dion (Faculté d'administration, Université de Sherbrooke, Sherbrooke, Canada)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 4 July 2016



The purpose of this paper is to philosophically address the issue of managerial opportunism and to describe the paradox of the opportunistic executive, particularly when the CEO could be considered as a “criminal-to-be”.


It will be seen to what extent governance mechanisms really contribute to prevent managerial opportunism, particularly through compensation packages (“financial carrots”). Then, Oliver E. Williamson’s viewpoint will be analyzed on opportunism, as his theory has largely influenced the way agency theories actually define managerial opportunism. Williamson was thinking opportunism without referring to philosophical works. The gap in exploring three basic types of opportunism will be filled: the Smithian egoist, the Hobbesian egoist and the Machiavellian egoist.


The Smithian egoist tries to reach an equilibrium between self-interest and compassion, while the Hobbesian egoist is motivated by self-interest, desire of power and the attitude of prudence. The Machiavellian egoist is always searching for power and makes followers’ fear arising. The way governance mechanisms and structures should be designed and implemented could be quite different if the CEO actually behaves as a Smithian, Hobbesian or Machiavellian egoist. CEO’s propensity to commit financial crime could largely vary from one type to another: low risk (Smithian egoist), medium risk (Hobbesian egoist) or high risk (Machiavellian egoist).

Research limitation/implications

Smith’s, Hobbes’ and Machiavelli’s philosophy was chosen because the agency theory sometimes refers to it, when defining the notion of opportunism. Other philosophies could also be analyzed to see to what extent they are opening the door to opportunism (for example, Spinoza).


The paper analyzes managerial opportunism from a philosophical viewpoint. Whether executives are Smithian, Hobbesian or Machiavellian egoists, their opportunism cannot give birth to similar behaviors.



Dion, M. (2016), "Agency theory and financial crime: the paradox of the opportunistic executive", Journal of Financial Crime, Vol. 23 No. 3, pp. 574-587.



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