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Corporate criminal law and organization incentives: A managerial perspective

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  • Nuno Garoupa

Abstract

Corporate criminal liability puts a serious challenge to the economic theory of enforcement. Are corporate crimes different from other crimes? Are these crimes best deterred by punishing individuals, punishing corporations, or both? What is optimal structure of sanctions? Should corporate liability be criminal or civil? This paper has two major contributions to the literature. First, it provides a common analytical framework to most results presented and largely discussed in the field. In second place, by making use of the framework, we provide new insights into how corporations should be punished for the offenses committed by their employees.

Suggested Citation

  • Nuno Garoupa, 2000. "Corporate criminal law and organization incentives: A managerial perspective," Economics Working Papers 529, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:529
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    References listed on IDEAS

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    1. Alexander, C.R. & Cohen, M.A., 1996. "New Evidence on the Origins of Corporate Crime," Papers 96-05, U.S. Department of Justice - Antitrust Division.
    2. Fischel, Daniel R & Sykes, Alan O, 1996. "Corporate Crime," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 319-349, June.
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    5. Shavell, Steven, 1997. "The optimal level of corporate liability given the limited ability of corporations to penalize their employees," International Review of Law and Economics, Elsevier, vol. 17(2), pages 203-213, June.
    6. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    7. Parker, Jeffrey S & Atkins, Raymond A, 1999. "Did the Corporate Criminal Sentencing Guidelines Matter? Some Preliminary Empirical Observations," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 423-453, April.
    8. Alexander, Cindy R, 1999. "On the Nature of the Reputational Penalty for Corporate Crime: Evidence," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 489-526, April.
    9. Polinsky, A. Mitchell & Shavell, Steven, 1993. "Should employees be subject to fines and imprisonment given the existence of corporate liability?," International Review of Law and Economics, Elsevier, vol. 13(3), pages 239-257, September.
    10. Karpoff, Jonathan M & Lott, John R, Jr, 1993. "The Reputational Penalty Firms Bear from Committing Criminal Fraud," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 757-802, October.
    11. Alexander, Cindy R & Arlen, Jennifer & Cohen, Mark A, 1999. "Regulating Corporate Criminal Sanctions: Federal Guidelines and the Sentencing of Public Firms," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 393-422, April.
    12. Alexander, Cindy R. & Cohen, Mark A., 1999. "Why do corporations become criminals? Ownership, hidden actions, and crime as an agency cost," Journal of Corporate Finance, Elsevier, vol. 5(1), pages 1-34, March.
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    Cited by:

    1. Dietrich Earnhart & Sandra Rousseau, 2024. "Sanctioning environmental offenses committed by companies: the joint use of firm and employee sanctions," European Journal of Law and Economics, Springer, vol. 58(1), pages 71-118, August.
    2. Nuno Garoupa, 2004. "Punish Once or Punish Twice: A Theory of the Use of Criminal Sanctions in Addition to Regulatory Penalties," American Law and Economics Review, American Law and Economics Association, vol. 6(2), pages 410-433.
    3. Maarten Pieter Schinkel, 2008. "Forensic Economics In Competition Law Enforcement," Journal of Competition Law and Economics, Oxford University Press, vol. 4(1), pages 1-30.
    4. Daniel Herold, 2017. "The Impact of Incentive Pay on Corporate Crime," MAGKS Papers on Economics 201752, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Thomas J. Miceli & Kathleen Segerson, 2007. "Punishing the Innocent along with the Guilty: The Economics of Individual versus Group Punishment," The Journal of Legal Studies, University of Chicago Press, vol. 36(1), pages 81-106, January.
    6. Echazu, Luciana & Garoupa, Nuno, 2012. "Why not adopt a loser-pays-all rule in criminal litigation?," International Review of Law and Economics, Elsevier, vol. 32(2), pages 233-241.
    7. Funk, Patricia, 2004. "On the effective use of stigma as a crime-deterrent," European Economic Review, Elsevier, vol. 48(4), pages 715-728, August.
    8. Thomas J. Miceli, 2013. "Collective Responsibility," Working papers 2013-23, University of Connecticut, Department of Economics.
    9. Werle, Nick, 2015. "A microeconomic model of opportunistic financial crimes: prosecutorial strategy when firms are too big to jail," LSE Research Online Documents on Economics 68261, London School of Economics and Political Science, LSE Library.
    10. Robin Christmann & Roland Kirstein, 2023. "You go first!: coordination problems and the burden of proof in inquisitorial prosecution," European Journal of Law and Economics, Springer, vol. 56(2), pages 403-422, October.
    11. Nuno Garoupa & Jonathan Klick & Francesco Parisi, 2006. "A law and economics perspective on terrorism," Public Choice, Springer, vol. 128(1), pages 147-168, July.
    12. Paolo Polidori & D?sir?e Teobaldelli, 2012. "Corporate Criminal Liability and Optimal Behavior by Firms.Internal Monitoring Devices versus Managerial Incentives," Working Papers 1216, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2012.

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    More about this item

    Keywords

    Law Enforcement; Corporation;

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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