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Fraud at a Distance? How Remote Work Shapes Financial Misconduct

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Listed:
  • John M. Barrios
  • Jessie Jianwen Guo
  • Yanping Zhu

Abstract

Financial misconduct is often a team activity, facilitated by face-to-face interactions, shared norms, and trust. We exploit the sudden shift to remote work during COVID-19 to examine how workplace organization shapes collusion and financial misconduct. Using a novel firm-level measure of work-from-home feasibility, we find that firms that are more able to operate remotely experienced large post-2020 declines in misconduct. This decline is found across multiple misreporting proxies and is robust to various alternative measures of remote work. Cross-sectional tests indicate stronger declines in teamwork-intensive firms, firms with effective internal controls, and firms with weaker pre-COVID employee perceptions of culture and leadership. Overall, our findings reflect that financial misconduct is a team activity, sensitive to the organizational structure of the firm, with important implications for governance and organizational design.

Suggested Citation

  • John M. Barrios & Jessie Jianwen Guo & Yanping Zhu, 2025. "Fraud at a Distance? How Remote Work Shapes Financial Misconduct," NBER Working Papers 34417, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34417
    Note: CF LE LS PR
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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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