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A model of corporate self-policing and self-reporting

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  • Iwasaki, Masaki

Abstract

What are the effects of corporate self-reporting schemes on deterrence of corporate crime? This paper presents a model to analyze this question for the case in which a firm's manager, who has stock-based compensation, commits a corporate crime and the firm conducts self-policing and self-reporting. Corporate self-reporting schemes may enhance deterrence if the level of corporate leniency is within a certain range. But the level of corporate leniency has a non-monotonic relationship with deterrence in that range: as the level of corporate sanctions decreases, receding from the upper limit of the range, the probability of crime occurring first decreases and then increases. The paper also considers the case in which both individual and corporate self-reporting programs are introduced. The social desirability of individual self-reporting schemes depends on whether firms can commit to a certain level of self-policing efforts.

Suggested Citation

  • Iwasaki, Masaki, 2020. "A model of corporate self-policing and self-reporting," International Review of Law and Economics, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:irlaec:v:63:y:2020:i:c:s0144818819302534
    DOI: 10.1016/j.irle.2020.105910
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    Cited by:

    1. Tina Søreide & Kasper Vagle, 2022. "Settlements in corporate bribery cases: an illusion of choice?," European Journal of Law and Economics, Springer, vol. 53(2), pages 261-287, April.

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    More about this item

    Keywords

    Corporate crime; Self-policing; Self-reporting; Deterrence;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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