 Great expectations: a regulatory promise unfulfilledMary Claire Mahaney and Murray Bryant International Journal of Critical Accounting, 2018, vol. 10, issue 1, 15-41 Abstract: The primary goal of the US Securities and Exchange Commission (SEC) is to protect investors by deterring wrongdoing resulting in investor loss. The SEC deters wrongdoing in two ways: by threatening penalties and signalling illegal behaviour. If the SEC does not hold individuals accountable or if it is unclear what actions are illegal, wrongdoing will continue. Consent decrees have become the SEC's enforcement norm. Through negotiation both the defendant and the agency avoid costs and save time, but individuals responsible for wrongdoing have largely avoided personal accountability. Although firms have introduced clawback provisions into executive contracts, evidence shows that boards of directors largely have not activated clawbacks. Boards must hold employees personally responsible; thus boards should design executive contracts that clearly state the rationale for clawbacks and a means by which their amounts - amounts both fair and in the best interests of the corporation - can be established. Keywords: Securities and Exchange Commission; SEC; regulatory; consent decree; neither admit nor deny; corporate governance; executive compensation; clawback; board; director; employee; fiduciary; wrongdoing; risk; accounting; critical accounting. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcrac:v:10:y:2018:i:1:p:15-41 Access Statistics for this article More articles in International Journal of Critical Accounting from Inderscience Enterprises Ltd |
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