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On the Nature of the Corrupt Firm: Where to Situate Liability?

Author

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  • Raphaela Seubert

    (University of Passau, Germany)

Abstract

Applying the modern Property Rights Approach to depict employment and firm-internal delegation relationships, this paper addresses the question how to prevent corporate bribery. The analysis and the answers that follow take into account interaction effects between firm-internal delegation relationships, the possibly devilish side function of formal corporate ethics efforts (namely to shield firms or superiors from criminal accountability by shifting it onto their subordinate employees), the distribution of criminal liability, and the necessity for courts to rely on available evidence. From the simple theoretical framework, a bundle of implications follows: (1) conditions under which formal corporate ethics guidelines can take on a Janus-faced nature, i.e. lack credibility, (2) suggestions how firms can enhance the credibility of their corporate ethics efforts, (3) starts how to avoid the possible “second-order” lack of credibility of such credibility- enhancing measures, (4) clear-cut statements as to (a) where criminal liability should be situated within the firm and (b) how corporate and individual liabilities should be combined to both restrain corruption and to sustain the credibility of corporate ethics. These implications allow comparatively evaluating the effectiveness of international anti- corruption laws – specifically the desirability of corporate vs. personal criminal liabilities.

Suggested Citation

  • Raphaela Seubert, 2005. "On the Nature of the Corrupt Firm: Where to Situate Liability?," Law and Economics 0503002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwple:0503002
    Note: Type of Document - pdf; pages: 38. 38 pages, pdf
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/0503/0503002.pdf
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    Cited by:

    1. Tina Søreide, 2008. "Beaten by Bribery: Why Not Blow the Whistle?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 407-428, September.

    More about this item

    Keywords

    Non-verifiable contracts; bribery; hard-copy evidence; delegation; mixed incentives; exit; voice; corporate ethics; all-for- one; victimize; Janus-faced; corporate liability;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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