Bounded rationality of prosecutorial decision-making in corporate fraud violations

Claire Nolasco Braaten and Lily Chi-Fang Tsai

Journal of Financial Crime, 2023, vol. 31, issue 6, 1273-1288

Abstract: Purpose - This study aims to analyze corporate mail and wire fraud penalties, using bounded rationality in decision-making and assessing internal and external influences on prosecutorial choices. Design/methodology/approach - The study analyzed 467 cases from 1992 to 2019, using data from the Corporate Prosecution Registry of the University of Virginia School of Law and Duke University School of Law. It examined corporations facing mail and wire fraud charges and other fraud crimes. Multiple regression linked predictor variables to the dependent variable, total payment. Findings - The study found that corporate penalties tend to be lower for financial institutions or corporations in countries with US free trade agreements. Conversely, penalties are higher when the company is a U.S. public company or filed in districts with more pending criminal cases. Originality/value - This study’s originality lies in applying the bounded rationality model to assess corporate prosecutorial decisions, unveiling external factors’ influence on corporate penalties.

Keywords: Corporate fraud; Bounded rationality; Financial crime; Corporate crime; Corporate penalties (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-09-2023-0221

DOI: 10.1108/JFC-09-2023-0221

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