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Blue-Collar Crime and Finance

Author

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  • Bernales, Alejandro
  • Beuermann, Diether W.
  • Cumming, Douglas
  • Olid, Christian

Abstract

We examine the reputational and persistent costs of blue-collar crime against firms. Blue-collar crime negatively affects firms' reputation regarding credit risk, which persists over time and worsens future access to, and the conditions of, external financing (even if firms are financially healthy again in the future, and even if current crime events are unrelated to future crime incidence). Blue-collar crime does not need to be disclosed to lenders, but revelation is more likely among firms with more employees and in smaller communities, due to potential information leakages. However, the CEO's work experience mitigates the impact of blue-collar crime on future financing conditions.

Suggested Citation

  • Bernales, Alejandro & Beuermann, Diether W. & Cumming, Douglas & Olid, Christian, 2023. "Blue-Collar Crime and Finance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:intfin:v:83:y:2023:i:c:s1042443122002049
    DOI: 10.1016/j.intfin.2022.101732
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    More about this item

    Keywords

    Blue-Collar Crime; External Financing; Credit Risk; Information Leakages; CEO's Work Experience;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law

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