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Increasing firm value through detection and prevention of white‐collar crime

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  • Karen Schnatterly

Abstract

White‐collar crime can cost a company from 1 percent to 6 percent of annual sales, yet little is known about the organizational conditions that can reduce this cost. Previous governance research has examined the link between block holders, boards of directors, or CEO compensation and fraud. In this study, these traditional measures of governance are found to have little impact. Instead, operational governance, including clarity of policies and procedures, formal cross‐company communication, and performance‐based pay for the board and for more employees, significantly reduces the likelihood of a crime commission. Copyright © 2003 John Wiley & Sons, Ltd.

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  • Karen Schnatterly, 2003. "Increasing firm value through detection and prevention of white‐collar crime," Strategic Management Journal, Wiley Blackwell, vol. 24(7), pages 587-614, July.
    • Handle: RePEc:bla:stratm:v:24:y:2003:i:7:p:587-614
    DOI: 10.1002/smj.330
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    Cited by:

    1. Kaptein, S.P., 2008. "The Relationship between Ethical Culture and Unethical Behavior in Work Groups: Testing the Corporate Ethical Virtues Model," ERIM Report Series Research in Management ERS-2008-037-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    2. Yongqiang Gao & Haibin Yang, 2021. "Does Ownership Matter? Firm Ownership and Corporate Illegality in China," Journal of Business Ethics, Springer, vol. 168(2), pages 431-445, January.
    3. Kishore Singh & Pran Boolaky & Kamil Omoteso, 2022. "The Relationship Between Politics, Legal System and Financial Reporting on Fraud," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(3), pages 397-430, September.
    4. Daniela Bolzani & Riccardo Fini & Gian Luca Marzocchi, 2021. "The influence of entrepreneurs’ immigrant status and time on the perceived likelihood of exporting," International Entrepreneurship and Management Journal, Springer, vol. 17(2), pages 593-623, June.
    5. Elisa Giuliani & Federica Nieri & Andrea Vezzulli, 2019. "BEST IN CLASS BUT BIG WRONGDOERS: Exploring the financial performance and human rights infringe ments nexus in large emerging country companies," Discussion Papers 2019/250, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    6. Del Bosco, Barbara & Misani, Nicola, 2011. "Keeping the enemies close: The contribution of corporate social responsibility to reducing crime against the firm," Scandinavian Journal of Management, Elsevier, vol. 27(1), pages 87-98, March.
    7. Smulowitz, Stephen J. & Almandoz, Juan (“John”), 2021. "Reprint of “Predicting employee wrongdoing: The complementary effect of CEO option pay and the pay gap”," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 104-116.
    8. Evren Dilek Sengur, 2012. "Auditors' Perception Of Fraud Prevention Measures: Evidence From Turkey," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(14), pages 1-11.
    9. Arnold, Denis G. & Amato, Louis H. & Troyer, Jennifer L. & Stewart, Oscar Jerome, 2022. "Innovation and misconduct in the pharmaceutical industry," Journal of Business Research, Elsevier, vol. 144(C), pages 1052-1063.
    10. Xiaoyue Zhao & Ming Jia, 2024. "In the name of awards: environmental award, legitimacy dominance, and corporate pollution," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 21147-21168, August.
    11. Smulowitz, Stephen J. & Almandoz, Juan, 2021. "Predicting employee wrongdoing: The complementary effect of CEO option pay and the pay gap," Organizational Behavior and Human Decision Processes, Elsevier, vol. 162(C), pages 123-135.
    12. Cesar Saenz & Lyla Romero, 2020. "Relationship between corporate governance and social responsibility: Evidenced in mining companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 552-561, March.
    13. David Noack & Douglas R. Miller & Dustin Smith, 2019. "Let Me Make It Up to You: Understanding the Mitigative Ability of Corporate Social Responsibility Following Product Recalls," Journal of Business Ethics, Springer, vol. 157(2), pages 431-446, June.
    14. Kevin J. Johnson & Joé T. Martineau & Saouré Kouamé & Gokhan Turgut & Serge Poisson-de-Haro, 2018. "On the Unethical Use of Privileged Information in Strategic Decision-Making: The Effects of Peers’ Ethicality, Perceived Cohesion, and Team Performance," Journal of Business Ethics, Springer, vol. 152(4), pages 917-929, November.
    15. Haans, Richard F.J. & van den Oever, Koen, 2021. "Foreign entrepreneurs engage in less misconduct than native entrepreneurs: Evidence from U.K. director disqualifications," Journal of Business Venturing Insights, Elsevier, vol. 16(C).

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