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1 – 10 of over 2000
Article
Publication date: 13 May 2019

Zheming Liu, Saixing Zeng, Xiaodong Xu, Han Lin and Hanyang Ma

The purpose of this paper is to investigate how revelations of corporate misconduct are associated with trade credit. Specifically, it investigates how this association…

Abstract

Purpose

The purpose of this paper is to investigate how revelations of corporate misconduct are associated with trade credit. Specifically, it investigates how this association varies in different regions, in different types of industries and in response to companies’ subsequent charitable donations.

Design/methodology/approach

The authors empirically tested various hypotheses using a sample of 2,725 Chinese A-share listed companies from 2009 to 2014 based on signaling theory. Fixed effect models underpinned the methods used.

Findings

The authors found that corporate misconduct has a significant negative impact on an irresponsible company’s trade credit received and granted, and the negative impact is heterogeneous for different regions and industries. There is no evidence that charitable donations mitigate the effect on the trade credit of irresponsible companies following revelations of corporate misconduct.

Practical implications

The results suggest that listed companies in China should obey national and local laws and regulations if they wish to avoid the risk of significant trade credit loss. If a company’s violation of these laws and regulations is disclosed, making charitable donations is not an effective strategy for safeguarding trade credit.

Originality/value

This study enriches understanding on the consequences of corporate misconduct and extends the literature on trade credit. It fills a research gap by identifying the impact of corporate misconduct on trade credit.

Details

Chinese Management Studies, vol. 13 no. 3
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 11 July 2016

Gary Davies and Isabel Olmedo-Cifuentes

This paper aims to identify a typology of corporate misconduct affecting trust; to test the relative ability of individual misconducts to reduce trust and; to explain…

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Abstract

Purpose

This paper aims to identify a typology of corporate misconduct affecting trust; to test the relative ability of individual misconducts to reduce trust and; to explain differences in how individuals respond to corporate crises.

Design/methodology/approach

The main research design uses conjoint analysis. Respondents (n = 404) rated eight combinations of six types of misconduct, identified from prior work on trust as likely to reduce trust. Initial levels of trust were established by varying both country of origin and product type.

Findings

The importance ranking for the six types was consistent across most conditions, with “bending the law” and “not telling the truth” as the most salient and “acting unfairly” and “acting irresponsibly” as the least salient in damaging trust. The characteristics of the respondent influenced the effect size.

Practical implications

As loss of trust represents loss of reputation, understanding how and when the framing of misconduct damages trust is important in managing reputation risk. The impact of any report of misconduct can be moderated if attributed by a company, the media or the individual, to a type that is less damaging to trust.

Originality/value

This study adds to our understanding as to why individuals respond differently to corporate misconduct, and contributes to prior work on reputation damage. The typology of corporate misconduct developed and tested here offers a different framework for researchers and practitioners with which to explore loss of trust and to develop existing crisis communication theory.

Details

European Journal of Marketing, vol. 50 no. 7/8
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 13 July 2022

Megan Jean Parker and Mary Dodge

Deferred prosecution agreements (DPAs) are the tool of choice for federal prosecutors when adjudicating corporate misconduct. A DPA is a negotiation that permits the…

Abstract

Purpose

Deferred prosecution agreements (DPAs) are the tool of choice for federal prosecutors when adjudicating corporate misconduct. A DPA is a negotiation that permits the allegedly guilty party from undergoing a criminal trial if they avoid committing further wrongdoing for a specified period. This paper aims to examine whether DPAs are a beneficial mechanism for the criminal justice system to use while adjudicating corporate misconduct. By conducting in-depth semi-structured qualitative interviews with 24 practitioners in the legal field and white-collar crime experts, this study identifies the shortcomings and advantages of DPAs and highlights what policy enactments might enhance their application. The study contributes to the existing literature by expanding the narratives used by judicial officials, legal practitioners and white-collar crime scholars on the role of DPAs.

Design/methodology/approach

The current study is an in-depth qualitative analysis that explores judicial actors’ and white-collar crime scholars’ opinions on the adoption of DPAs to adjudicate corporate misconduct. The literature on DPAs is currently derived primarily from law and literature reviews published by legal scholars. Clandestine negotiations are not accessible to the public and are frequently kept in sealed files unless a breach of contract occurs, resulting in the case proceeding to trial. Hence, a qualitative analysis is the best approach to evaluate the effectiveness of DPAs. Further, little evidence is available that focuses on the opinions of professionals who have participated in these agreements. The interviews were conducted over Zoom and lasted an average of 43 min, with the longest interview spanning 1 h and 45 min and the shortest interview being 14 minutes. A non-probability sampling method – specifically, snowball sampling – was used to generate a total sample of 24 legal professionals and white-collar crime scholars. Initial participants were found by contacting law offices specializing in white-collar crime litigation and using current networks to attain access to a broader range of participants. Then, 19 participants provided referrals throughout the study. The final sample consisted of nine government officials, eight legal practitioners and seven white-collar crime academics experts. One of the government official interviews was excluded from the final research project due to a lack of expertise in the field of white-collar crime. The interview questions were designed to promote in-depth conversation and insight into personal opinions on the adoption of DPAs. Several inquiries highlighted whether DPAs are an appropriate response to corporate misconduct and whether they reduced recidivism through their intended deterrent effect. Furthermore, several descriptive questions sought to understand which criminal justice actors support the adoption of DPAs in white-collar crime cases and why. Coding of the data was first conducted individually by each author. The researchers then compared thematic findings that reflected consensus.

Findings

An immediate theme identifiable in the research is the intrinsic value that DPAs offer in adjudicating corporate wrongdoing. As indicated by a participant, corporate misconduct is not “black or white,” stressing the importance of prosecutors having a middle ground between criminal prosecution and the dismissal of charges. A judicial official indicated that “DPAs are another essential arrow in a prosecutor’s quiver – and something a defense attorney can bargain for” (Respondent 5). Seven government officials and legal practitioners noted that you are unable to send a corporation to jail, and you do not simply want to put them out of business; thus, a DPA is the only tool in which the government can mandate structural change in a company without dismantling the entire entity. Only three academics concurred with the government officials and legal practitioners that DPAs are beneficial and offer prosecutors a vital middle ground. One academic, for example, stated that “DPAs have given U.S Attorney offices that ability to be involved for a considerable amount of time in a company's business, while simultaneously promoting change within the entity” (Respondent 14). Additionally, DPAs ensure that corporations are held criminally liable without triggering an endless cycle of collateral consequences for innocent third parties. One legal practitioner, for example, stated: “Just look at the Enron case; they charged Arthur Andersen with obstruction of justice and dismantled the entire entity they made it where the business was never going to come back. A small subset of individuals, in this case, should have been held responsible but instead, hundreds and if not thousands of people were harmed. With this in mind, DPAs are extremely important, in that it limits collateral consequences because DPAs take a more holistic view that criminal prosecution does not consider” (Respondent 21). Another respondent highlighted that “DPAs are the only tool available that can be employed to change an entire organization structurally” (Respondent 20). Ultimately, the findings suggest that there is a consensus among respondents that DPAs are an appropriate response to corporate misconduct, particularly when the agreement stipulates that a company must hire an external compliance monitor and update their current compliance system. Overall, participants emphasized that these stipulations promote a sense of corporate accountability, provide for the dismissal of guilty employees and mandate structural change. The majority of the respondents (n = 20) insisted that DPAs are advantageous, yet a subset of participants were skeptical of their use in white-collar crime prosecutions. One legal practitioner, for example, noted that “DPAs are political creatures that are awarded as political favors to the largest of corporations that our economy relies upon” (Respondent 17). Another government official confirmed this statement, indicating that “DPAs are a mere slap on the wrist for large corporations – they simply see it as doing business” (Respondent 6). Four academic participants emphasized that DPAs are typically negotiated with multi-level corporations and are not extended to the small businesses that suffer the dire consequences of criminal prosecution. One academic, for instance, stressed that “the question becomes is it fairly applied and being implemented properly. Larger companies are more likely to receive and benefit from a DPA, thus, raising the question of fairness” (Respondent 12). Another academic who was previously a government official stated: “DPAs risk abuse – there have been several instances where prosecutors have forced companies to donate money to favored charities and overstepped their powers. Sometimes DPAs also come with monitors. For example, banks typically have to pay for the auditor, and it becomes extremely intrusive, and it it not clear that they are efficient.”

Research limitations/implications

Several limitations exist in this research. First, it is not a comprehensive study that is representative of the larger population, which limits generalizability. Given the contention of research on DPAs, this qualitative research contributes to the literature, and its findings are likely transferable to multiple settings in which DPAs are used. Second, DPAs are processed and drafted differently across jurisdictions; thus, comparing DPAs across state levels and among departments in the federal government would be equivalent to comparing apples to oranges. This comparison is yet another limitation to the study because criminal justice practitioners operate in both the state and federal jurisdictions. Another challenge in the current study and something that likely will be a problem for future researchers is the difficulty of gaining access to experts in an exclusive field of criminal justice, such as federal prosecutors, Department of Justice officials, federal judges and elite corporate defense attorneys. Ultimately, several obstacles arose during the study, particularly when recruiting participants to gain a large enough sample size to conduct meaningful analysis. This resulted in smaller sample size but rich, in-depth data that achieved saturation among participants.

Practical implications

Several policy implications are identifiable. First, it appears that DPAs are a mainstay of white-collar crime prosecution. No participants advocate for their complete removal from the prosecution process. Participants highlight that DPAs occupy an essential middle-ground between dismissal and criminal charges. Without this mechanism, prosecution would be impeded, and holding corporate criminal actors liable would increasingly become formidable. Although it appears that the system cannot function without DPAs, several respondents emphasize that we must begin to hold individuals accountable alongside corporations. Another policy implication that a minority of participants mentioned within the study involves ensuring that our compliance monitoring system operates appropriately. A majority of participants note that the overarching stipulation that promotes structural change within an organization is adopting a functioning compliance monitoring system, thus, emphasizing the importance of this process operating smoothly and ethically. The selection of an independent compliance monitor may be problematic. For example, a former government compliance monitor notes that not all monitors are experts in the field they are overseeing. A pharmaceutical expert, for example, may be attempting to regulate an automotive organization, which may present unique challenges. An agency of federal professionals dedicated to supervising specific industries such as automotive, pharmaceutical and financial would ensure that organizations are actually implementing the terms of the DPA.

Originality/value

Ultimately, the current research highlights the necessity of empirically studying the benefits and drawbacks of such agreements. Future research on the topic remains onerous due to the scarcity of a centralized database that contains extensive details of DPAs. The present study suggests that the verdict on DPAs is undecided, with more than half of the study's criminal justice professionals advocating for their continued and even increased use. However, about half of the participants, particularly academics, called attention to the agreements’ potential bias. The disagreement among participants is most contentious in the consideration of a DPA centralized database which would immensely aid future research and policy advancements.

Article
Publication date: 1 August 2003

Spero C. Peppas

Recent news of corporate misconduct at Arthur Andersen, Enron, WorldCom, etc., has focused attention on ethics in business. Government, business, educational institutions…

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Abstract

Recent news of corporate misconduct at Arthur Andersen, Enron, WorldCom, etc., has focused attention on ethics in business. Government, business, educational institutions, as well as professional organisations have had to rethink ways of addressing this issue. This article presents the findings of a study of attitudes toward business codes of ethics. The attitudes of Master’s‐level US business students at two different points in time, before and after recent reports of corporate misconduct, are compared to see what changes had occurred, to see whether these changes were linked to the disclosures of unethical corporate conduct, and to examine whether taking a course in ethics had an effect on attitudes.

Details

Management Research News, vol. 26 no. 6
Type: Research Article
ISSN: 0140-9174

Keywords

Article
Publication date: 1 April 2019

Alexander Glebovskiy

This paper aims to discuss criminogenic elements and processes inherently presented in business organisations that affect the emergence of crime committed in or by…

Abstract

Purpose

This paper aims to discuss criminogenic elements and processes inherently presented in business organisations that affect the emergence of crime committed in or by business organisations.

Design/methodology/approach

This conceptual paper, based on relevant literature regarding a range of crime-coercive and crime-facilitative elements and forces that promote corporate crime, considers business organisations as a cogent unit of analysis to discuss the causation and origin of corporate crime.

Findings

Business organisations are, per se, criminogenic, i.e. companies are latently prone to committing crime, but are not necessarily criminal. By seeking to achieve commercial goals, companies can unintentionally create an atmosphere that invites crimes and unethical conduct. Organisational criminality is not primarily influenced by deviance in individual behaviour, but is a product of the organisation’s criminogenic settings and environment. Criminal activity arises from contact with criminogenic systems and employees’ adaption to organisational behaviours that do not meet the highest ethical and moral standards.

Research limitations/implications

This is a theoretical analysis, lacking empirical research.

Practical implications

This study can help anti-fraud and compliance practitioners to develop anti-fraud strategies to prevent corporate crime at its source and further discussion on the causes of corporate misconduct and progresses the debate on the sources of illegal and unethical behaviour displayed in, and by, business organisations.

Originality/value

This paper highlights intrinsic features of business organisations that influence companies and employees to engage in illegal activities, malpractice and unethical behaviour and provides a conceptual framework and insights into the realm of inherent criminogenesis within business organisations and how this is shaped by organisations themselves.

Details

Journal of Financial Crime, vol. 26 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

Book part
Publication date: 3 September 2018

Wan Nailah Abdullah and Roshima Said

The chapter focuses on the personal characteristics of top executives in companies involved in corporate financial crime as well as the introduction of human governance as…

Abstract

The chapter focuses on the personal characteristics of top executives in companies involved in corporate financial crime as well as the introduction of human governance as one of the mechanisms in preventing corporate misbehaviour. This chapter discusses directors’ and top management teams’ personal characteristics – in the context of corporate governance – that may influence the occurrence of corporate financial crime. The study further proposes the human governance factor as a possible mechanism to improve corporate governance in preventing such misbehaviour. This chapter highlights the personal characteristics of top executives, which may become the indicators of corporate financial crime, as well as human governance, which is shown to be one of the most important mechanisms of corporate governance for corporate financial crime prevention.

Details

Redefining Corporate Social Responsibility
Type: Book
ISBN: 978-1-78756-162-5

Keywords

Article
Publication date: 2 September 2021

Ling-Yun He and Hongzhen Zhang

Inspired by the comparison of charity donations among candidates in rural elections, the authors linked the non-profit motives of charity to corporate pollution emissions…

Abstract

Purpose

Inspired by the comparison of charity donations among candidates in rural elections, the authors linked the non-profit motives of charity to corporate pollution emissions. And on this basis, the authors aim to provide theoretical and empirical explanations for the relationship between corporate philanthropy and pollution. The authors find that the desire to pursue more pollution emissions stimulates the firm's philanthropy, which is similar to the public welfare donations in rural elections.

Design/methodology/approach

Firstly, the authors construct a game-theoretical framework consisting of an entrepreneur and a bureaucrat to study the environmental cost of corporate philanthropy through the impact on pollution emission by the firm. Secondly, the authors used various empirical methods, including hybrid OLS, IV-2SLS, PSM, etc., to empirically test the impact of a firm's philanthropy on corporate pollution emissions. Finally, the authors use the output and abatement input as intermediary variables and apply the intermediary effect model to test the impact mechanism between corporate philanthropy and corporate pollution emissions.

Findings

Theoretical model finds that the firm invests more in philanthropy discharges more emissions when the theoretical model is in political equilibrium. Besides, empirical results show that corporate philanthropy will lead to more pollution emissions by reducing abatement input and increasing production. Finally, the heterogeneity test finds that compared with state-owned enterprises, the intention of non-state-owned enterprises' philanthropy for more pollution emission is more obvious. Moreover, the improvement of regional environmental regulation can significantly inhibit the realization of corporate philanthropy's poor motive.

Practical implications

The results have obvious policy implications for China's future policy-making. Firstly, regulatory agencies should pay close attention to the charitable behaviors of firms with serious negative environmental externalities, and prevent them from replacing more pollution emissions with philanthropy. Besides, due to weak environmental supervision in rural areas, rural polluting enterprises will be more inclined to make charitable donations to the village collective to obtain more emission rights. Therefore, the government should strengthen environmental supervision in rural areas to prevent enterprises from wanton pollution.

Originality/value

By constructing a game-theoretical framework consisting of an entrepreneur and a bureaucrat, the authors expound on corporate philanthropy's pollution motivation and decision-making mechanism for the first time in theory. Besides, this paper finds that the desire to pursue more pollution emissions also stimulates the firm's philanthropy. This paper expands the literature on corporate charitable donation motivations.

Details

China Agricultural Economic Review, vol. 14 no. 1
Type: Research Article
ISSN: 1756-137X

Keywords

Book part
Publication date: 14 March 2022

Marc Oberhauser and Marcus Conrad

Self-inflicted crises (SIC)– either intentionally induced or at least carelessly accepted – can tremendously damage a corporation’s reputation and legitimacy in the eyes

Abstract

Self-inflicted crises (SIC)– either intentionally induced or at least carelessly accepted – can tremendously damage a corporation’s reputation and legitimacy in the eyes of the stakeholders. While academia usually advices companies to accept full responsibility, practice shows that by far not all companies rely on such a responsible strategy. In practice, corporations choose various response strategies ranging from apologies, over diminishing approaches to full denials. By investigating a large data set embracing several countries and industries covering 696 cases of SIC, the authors analyze how corporations respond to such events and compare these response strategies across countries and types of crises.

This book chapter follows a domain-spanning approach by combining corporate social responsibility (CSR), crisis management, and stakeholder management to investigate how companies aim at solving crises. Drawing on attribution theory and situational crisis communication theory, the results reveal that corporations often do not follow the prevailing recommendation to take responsibility. The authors find that in the majority of cases, internationally active corporations try to deny or diminish their responsibility for the crises. Hence, the findings suggest that the concept of CSR is not working in the case of SIC since not only the existence of such corporate behavior but also the use of denial and diminish strategies contradicts the idea of corporate responsibility. Moreover, the authors shed light on possible differences and preferences toward a specific response strategy between countries and between different types of crises.

The authors contribute to the growing literature in the field of crisis management and crisis response strategies by investigating a large data set embracing several countries and industries. In this regard, the study differs from previous qualitative studies and experimental research as it is based on a large cross-country and cross-company set of secondary data. Thereby, the study allows drawing conclusions for a wide range of corporations and countries, hence increasing its general applicability.

Abstract

Details

Corporate Fraud Exposed
Type: Book
ISBN: 978-1-78973-418-8

Article
Publication date: 5 April 2021

Dane K. Peterson, Cathryn Van Landuyt and Courtney Pham

This paper examines how the inferred motives for corporate philanthropy relate to the types of charitable causes supported.

Abstract

Purpose

This paper examines how the inferred motives for corporate philanthropy relate to the types of charitable causes supported.

Design/methodology/approach

Published data were obtained for 256 publicly traded and private corporations from a variety of sources.

Findings

The results demonstrated that a number of motives were not significantly related to total charitable giving, but were related to how charitable funds were distributed to various charitable causes. Thus, the study provides insights on the strategic use of corporate charity as means of achieving various business objectives and advancing a theoretical understanding of corporate philanthropy strategies.

Research limitations/implications

This study only investigated some of the presumed motives for corporate philanthropy. Even for the motives investigated in this study, no attempt was made to examine all the motivational factors that determine the level of need for a specific motive. Thus, while the present study provides some of the first evidence of a relationship between motivational factors and data on the types of charitable causes supported, there are other motivational factors that could be investigated in future studies.

Practical implications

The results have a number of implications for managers of nonprofit organizations such as marketing/targeting potential donors. Additionally, the results could be useful for managers of for profit firms in terms of comparing corporate strategies with competing firms.

Originality/value

The study provides a framework for investigating the relationship between motivational factors and types of charitable causes supported.

Details

Journal of Strategy and Management, vol. 14 no. 4
Type: Research Article
ISSN: 1755-425X

Keywords

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