Financial Wrongdoing Research Articles

Convenience propositions for white-collar offenders: Perceptions of seriousness in Romania

Perception of white-collar crime seriousness varies from unfortunate incidents that can be excused to a major crime that needs harsh punishment. Students at a university in Romania were asked about their perceptions of seriousness. On a scale from 1 (not serious) to 7 (extremely serious) most students responded by very serious (6) on most questionnaire items. Responses indicate that individual greed to benefit the person is the most serious, while a rational choice of crime is the least serious. This study concludes that students consider white-collar crime to be less serious when people involved use financial wrongdoings as a last resort to avoid personal/organizational bankruptcy. they seem more indulgent when financial crime is a result of omission/concealment of criminal activity.

:Normalized Financial Wrongdoing: How Re-regulating Markets Created Risks and Fostered Inequality

:<i>Normalized Financial Wrongdoing: How Re-regulating Markets Created Risks and Fostered Inequality</i>

The Analysis of Luckin Coffee's Accounting Scandal

In recent years, a company called Luckin Coffee in China got caught up in a big money scandal that shook both Chinese business circles and global financial markets. This study dives into what happened with Luckin Coffee, trying to figure out why it happened, how it impacted other companies, people who put their money in, and the whole market, and what can be done to stop such problems down the road. By going through different articles and reports, this study will thoroughly look into the backdrop and particulars of Luckin Coffee's financial mishap, and its repercussions both in China and on a global scale. The objective is to dig out the true causes of such financial wrongdoings and propose solutions for better oversight of company finances to prevent a repeat of such scenarios. Through an in-depth analysis of the financial fraud incident of Luckin Coffee, this research not only has important theoretical and practical significance for understanding and preventing financial fraud, but also provides valuable experience and lessons for financial regulatory agencies and enterprises, and promotes financial management and supervision.

Unravelling Financial Wrongdoing: A Regulatory Perspective on Crimes in the Indonesian Capital Market

Unravelling Financial Wrongdoing: A Regulatory Perspective on Crimes in the Indonesian Capital Market

Motivation and Countermeasures of Financial Fraud in Listed Companies A Case Study of Luckin Coffee

The prevalence of financial fraud within publicly traded corporations has emerged as a significant concern within the field of auditing. In recent years, there has been an exacerbation rather than a mitigation of instances of financial fraud. Luckin Coffee is a domestic coffee brand that has emerged in the market, established by Qian Zhiya, who previously served as the CEO of Shenzhou Youchuan Group. Established in the year 2017, the organization achieved a notable milestone by being successfully listed on the NASDAQ stock exchange in 2019. In the year 2020, the disclosure of financial wrongdoing occurred. The discreet and innovative financial fraudulent practices employed by Luckin Coffee can serve as a valuable point of reference for the future advancement of firms. This paper presents an introduction to the fundamental notion of financial fraud and its associated theories. It proceeds to investigate the specific financial fraud process employed by Luckin Coffee. Additionally, it proposes recommendations for mitigating the risk of financial fraud in listed businesses, utilizing the Gone theory.

Book Review: Normalized Financial Wrongdoing: How Re-regulating Markets Created Risks and Fostered Inequality

Book Review: Normalized Financial Wrongdoing: How Re-regulating Markets Created Risks and Fostered Inequality

Measuring the Importance of Forensic Accounting and The Necessity of Integrating It into Higher Education Curricula

In the specialist field of accounting known as "forensic accounting," financial knowledge is used to look into and settle legal disputes and financial crimes. The need for forensic accounting knowledge has increased in recent years as businesses and organizations are under more pressure to adhere to complicated standards and stop financial wrongdoing. The trend has been affected by a number of factors, including the growth of international trade, the rapid improvement of technology, as well as the threats posed by ransomware. As a result, many businesses now understand the value of having forensic accountants on staff or retainers to aid in the detection and avoidance of financial crime and investigate and resolve legal issues.The significance of forensic accounting is examined in this essay as the requirement that it be included in curricula for higher education. A brief history of forensic accounting is given at the outset, and then a review of the literature on the subject's significance and efficacy in identifying and preventing fraud follows. To do this, research will be done on the economic effects of fraud, the efficiency of forensic accounting in identifying and preventing fraud, and the state of forensic accounting education right now. Then, a survey of accounting professionals is undertaken to acquire information regarding the perceived significance of forensic accounting and the requirement of integrating it into higher education courses. The survey results are analyzed to ascertain the perceived significance of forensic accounting and the necessity for ongoing study in this field. This article will thoroughly evaluate the significance of forensic accounting, the necessity of incorporating it into higher education courses, and the need for ongoing forensic accounting research using the analyzed survey results.

Using a “Bystander Bounty” to Encourage the Reporting of Workplace Sexual Harassment

Sexual harassment has become a fact of the modern workplace—something that society laments and regrets, but that rarely shocks the conscience when it comes to light. In fact, both the least and most surprising aspect of workplace sexual harassment is the number of individuals who are aware of it occurring. For every Harvey Weinstein, Matt Lauer, and Louis C.K., there have been countless observers who knew about their depravity and who did nothing to stop their behavior. In this way, one obvious approach for reducing harassment at work seems clearly to involve mobilizing these bystanders—encouraging those who witness this misconduct to come forward and report the wrongdoing. Yet for a variety of reasons, bystanders often (quite rationally) choose to remain silent. This Article suggests a novel approach to overcome the forces that inhibit bystanders from speaking out. In the context of financial crimes, the law has successfully encouraged bystander reporting by applying a bounty system that provides significant financial rewards to those who report the wrongdoing that they observe. Indeed, those who have observed financial wrongdoing have reaped millions of dollars in rewards, presumably overcoming whatever reluctance they once may have felt about disclosing the misdeeds of colleagues and associates. This Article suggests applying a similar bounty system to workplace sexual harassment; it proposes awarding bystanders a piece of the recovery when their reports of observed workplace sexual harassment culminate into successful lawsuits against the perpetrators of this misconduct. Blowing the whistle on wrongdoing—harassment or otherwise—comes rife with countless concerns for those who consider speaking out. Giving such bystanders a financial incentive to come forward has worked in other contexts to override this reluctance. Perhaps the same can be true for those who observe sexual harassment at work, providing a much-needed step towards reducing this scourge in the workplace.

Women Directors’ Turnover Following Financial Misconduct: What's Social Environment Got to Do with It?

AbstractIn this study, we consider the role of social environment in boards’ decisions whether to replace women directors or not following corporate financial misconduct. To explain the board's decision, two competing hypotheses are presented. The immunity perspective suggests that women directors benefit from growing social pressures to increase women's representation on boards, resulting in a lower turnover, while the susceptibility perspective proposes that societal gender stereotypes that give rise to biased boards’ decisions result in a higher turnover. Using a sample of Chinese firms involved in financial misconduct during 2011–2019, we find strong support for the susceptibility perspective and show a higher turnover of women directors following financial wrongdoing. Further, we find that board gender diversity and a firm's belonging to male‐dominated industries increase women directors’ turnover. Our findings make important contributions to directors’ turnover literature and practice.

Normalized Financial Wrongdoing: How Re-regulating Markets Created Risks and Fostered Inequality

Normalized Financial Wrongdoing: How Re-regulating Markets Created Risks and Fostered Inequality

‘Walk softly and carry no stick’: Culture, opportunity and irresponsible risk-taking in the Irish banking sector

This article examines the generative conditions giving rise to the commission of irresponsible risk-taking in the Irish banking sector using differential association and opportunity theories. This framework is used as a lens to demonstrate how, at both an individual and a group level, ideas, beliefs, expectations, rewards and punishments had a causal impact on banking culture, where competitive and aggressive risk-taking was prioritised, networked and routinised. Though differential association theory and opportunity theory are usually treated as separate (and somewhat opposing) perspectives, this article offers a framework that integrates them both. It employs differential association only as a partial explanation, explaining that wrongdoing does not occur only where there is an excess of ‘definitions’ favouring it; it occurs when capable guardians are removed or undercut. The opportunity perspective is adopted to examine how the absence of credible supervision and enforcement in the financial services sector created situational conditions that facilitated wrongdoing. Moreover, opportunity theory is valuable in this context because it explains that the extent to which protection is offered often depends on political processes to create a structure and culture of enforcement and prosecution of offenders. Prior to the crisis, Ireland was championing light-touch regulation, advertising itself as an attractive place to do business, in which there was insufficient political support for tough sanctions to address financial wrongdoing.

Corporate social responsibility: An umbrella or a puddle on a rainy day? Evidence surrounding corporate financial misconduct

AbstractWe examine the way a fraudulent firm's pre‐ and post‐misconduct corporate social responsibility engagement is associated with its stock performance to investigate the reputational role of corporate social responsibility (CSR). In the short term, firms with good CSR performance suffer smaller market penalties upon the revelation of financial wrongdoing, supporting the buffer effect, as opposed to the backfire effect, of a good social image. We also find that the misbehaving firms’ post‐misconduct CSR efforts are negatively associated with delisting probabilities, and positively with stock returns. These findings support the argument that increasing post‐crisis CSR engagement can be an effective remedy for a damaged reputation.

How stock markets react to regulatory sanctions? Evidence from France

ABSTRACTOur study of how the stock market reacts to sanction announcements by the French financial regulator from 2004 to 2017 finds that the market reacts negatively when a sanction is announced in the press. Cross-sectional regression models show that the penalties are too low to influence market reactions. Our results suggest that after the financial crisis of 2008, a plethora of news on financial wrongdoings has desensitized markets to announcements of sanctions against large companies.

Whistleblowing as a new regulatory instrument in global governance: the case of tax evasion

The cross-border impacts of whistleblowing recently have become far more visible and consequential, as evident with the ‘Paradise’ and ‘Panama Papers’ leaks, which exposed tax and other financial wrongdoings of prominent personalities around the world, leading to scandals, resignations and prosecutions. Despite its new prominence, whistleblowing often continues to be seen as a series of ad hoc chance acts. We argue instead that whistleblowing is an increasingly institutionalized regulatory tool that is enabled by an emergent ‘whistleblowing system’, with similarities to other new forms of informal global governance. Whistleblowing can be controversial, and we develop a framework for assessing whether any particular whistleblowing event and the system that enables it are in the public interest. We then apply this analysis to the case of global tax evasion. We conclude that a whistleblowing system can make important contributions to difficult cross-border regulatory challenges such as tax evasion, especially where other governance systems fail.

The cost of not wanting to know – the professions, money laundering and organised crime

PurposeThis paper aims to advocate the development and re-emphasis of “epistemic virtue” in relevant professional ethical codes so that attention is re-focussed on the responsibility of relevant professionals to close windows of opportunity for financial wrongdoing and money laundering that are left open through the widespread practice of “wilful blindness”.Design/methodology/approachThis study is an exploration of the duty to know or find out in the accountancy profession via discussion and illustration of how failures in this field contributed to the financial crash; a relation of these failures to “seek the truth” to the concept of “epistemic virtue”; and a discussion of how a lack of epistemic virtue is a necessary condition for the successful practice of money laundering.FindingsThis paper considers the case for establishing a new framework for recalibrating the professional ethic model so that the primacy of outward looking attitudes to knowledge is re-established at the heart of professional ethics.Research limitations/implicationsThe paper advocates the adoption of specific training on outward looking epistemic values in all financially related professional bodies.Practical implicationsReview of ethical standards in the professions is required to ensure epistemic virtues are given due weight and prominence within them.Social implicationsThe accumulation of criminal capital under legitimate guises by serious organised crime requires poses an ongoing threat to the integrity of economic markets. A key step to improving defences against this threat is the elevation of epistemic virtue in the professions.Originality/valueTo raise awareness and prominence of epistemic virtue as a necessary component of professional integrity.

Finance on Trial

AbstractIn the context of the recent financial meltdown, the financial industry has frequently been accused of being indifferent to the irregular practices of its members or even to be criminogenic. But how do actors of the financial industry respond to such accusations and defend themselves? How do they justify their actions when facing legal charges as well as public blame? This article elucidates these questions through a rare ethnographic case: the first criminal trial of a trader involved in the manipulation of Libor, which took place in London in 2015. Tied to at least $300 trillion contracts, Libor is a benchmark that plays a key role in the financial industry. The paper offers a sociological framework to capture the justifications of financial wrongdoings, arguing that they are structured around three elements: (a) a conception of rules; (b) a narrative; (c) a form of responsibility. I distinguish three justifications: the one of the maker, of the interpreter and of the user. I finally discuss how these justifications contribute to the general tolerance towards white-collar crime.

Timely vs. delayed CEO turnover

This paper investigates changes in company performance following timely versus delayed CEO resignations due to financial wrongdoings. A timely resignation is proactively pushed by the company, and a delayed resignation is driven by investigations initiated by the SEC or other regulatory authorities. Our results show significant negative abnormal returns following the announcement of CEO resignations. In addition, compared with timely resignations, delayed resignations experience a larger and longer lasting negative stock market reaction. This suggests that CEO resignations due to financial wrongdoings are not perceived as good news by investors, and the delayed resignations could make investors lose more confidence, possibly because of worries about the ineffective corporate governance and supervision mechanism. We have found a significant negative relationship between CEO-chairman duality and the timeliness of CEO resignations. Our results have important implications for investors and policy makers.

Penalties regimes to counter corporate and financial wrongdoing in Australia – views of governance professionals

The issues of corporate misconduct, its effects and how regulators and other law enforcement actors respond to such behaviour are increasingly contentious in Australia and overseas. In the wake of a succession of scandals in recent years in Australia’s financial sector there has been much debate about whether the penalties regimes available to the Australian Securities and Investments Commission (ASIC) are adequate and whether they are being implemented effectively. This article discusses these issues drawing upon the results of an online survey of members of Governance Institute of Australia (GIA) conducted in mid-2016 by researchers at the University of Melbourne. The survey responses (n = 365) provide interesting insights into how penalties regimes to counter corporate misconduct are perceived by governance professionals.

Decentralized Enforcement to Combat Financial Wrongdoing in Pensions: What Types of Watchdogs Are Necessary to Keep the Foxes Out of the Henhouse?

American Business Law JournalVolume 53, Issue 1 p. 33-96 Original Article Decentralized Enforcement to Combat Financial Wrongdoing in Pensions: What Types of Watchdogs Are Necessary to Keep the Foxes Out of the Henhouse? Dana M. Muir, Dana M. MuirSearch for more papers by this author Dana M. Muir, Dana M. MuirSearch for more papers by this author First published: 21 January 2016 https://doi.org/10.1111/ablj.12072Citations: 1Read the full textAboutPDF ToolsExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume53, Issue1Spring 2016Pages 33-96 RelatedInformation

Discretionary justice

Purpose – The purpose of this paper is to understand the reasons why some financial crises do not result in extensive criminal prosecutions. Design/methodology/approach – The authors examine three major events: the crash of 1929 leading to the Great Depression, the collapse of the US Savings and Loan industry circa 1990 and the sub-prime mortgage meltdown. The authors explain how circumstances surrounding these financial collapses led to stark differences in criminal prosecutions. Findings – This review of prosecutions during three financial crises underscores the contingent nature of seeking criminal penalties for financial wrongdoing. The decision is influenced by a number of factors, including a prosecutor’s level of risk tolerance (probable win test); the potential economic impact of a successful conviction; the number of laws and regulations available in the prosecutorial tool kit; and the desired outcome which can range from new regulatory structures, to prosecutions that fix blame and satisfy the desire for scapegoats, to seeking financial penalties that shore up the government’s bottom line. Research limitations/implications – This study covers three crises and focuses on the US responses. A broader study could look across countries. Practical implications – Regulators and lawmakers are interested in avoiding future crises. Because crises are not anticipated, responses are determined by conditions of the moment. A frequent result is that laws and regulations are not in place. Decisions about likely preferred responses would allow anticipatory legislation and regulations. Social implications – Financial crises obviously have major implications for ordinary citizens far removed from the centers of finance. Improved responses to mitigate or avoid disasters would have profound impacts on people’s quality of life. Originality/value – The three crises have been studied individually. This work is different in that it examines the impact of a common set of factors over three crises covering a span of 80 years.