Corporate Criminal Liability and Optimal Behavior by Firms.Internal Monitoring Devices versus Managerial Incentives

Paolo Polidori and Désirée Teobaldelli

No 1216, Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini

Abstract: Corporate criminal liability legislation has been the subject of a widespread debate around the world in response to the financial scandals of the early 2000s. The existing legal regimes en- tail compliance requirements, such as internal monitoring mechanisms, with the aim of inducing firms to detect the wrongful conduct of their agents. We develop an analytical framework to address when and to what extent firms may find convenient to adopt these regulatory devices. We conclude that more productive firms and those operating in sectors where managers have more opportunities to undertake criminal activities are more likely to prevent such activities (through monitoring or the payment of e? ciency wages). When the potential returns of ille- gal activities are high or when the firms are large, implementing internal monitoring devices may be optimal, while smaller firms should generally prefer the payment of efficiency wages to prevent crimes by managers.

Keywords: Corporate Governance; Law Enforcement; Compliance; Deterrence; Regulation. (search for similar items in EconPapers)
JEL-codes: G34 G38 K22 K42 L50 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012, Revised 2012
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm, nep-iue and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_12_16.pdf First version, 2012 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:urb:wpaper:12_16

Access Statistics for this paper

More papers in Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini Contact information at EDIRC.
Bibliographic data for series maintained by Carmela Nicoletti ().