Perceptions about the frequency of misconduct – among the public, academics and even regulators – have largely been formed by examining enforcement statistics, which rely on the detection and sanctioning of the misconduct. This study aims to illuminate the real occurrence of corporate misconduct, much of which escapes public detection.
By examining confidential firm records describing misconduct within organizations, the author shows that public enforcement statistics significantly underestimate the amount of serious malfeasance that arises within firms.
Through analyzing records for several large multinational firms, the author finds that there are, on average, more than two instances of internally substantiated misconduct per week per firm.
Ultimately, this analysis illustrates the challenge of addressing corporate malfeasance within large organizations.
I would like to thank Jihwon Park, Alexa Scherf, Grace Liu, participants at the Cambridge International Symposium on Economic Crime and students in Corporate Criminal Investigations at Harvard Law School for helpful feedback on earlier drafts.
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