On the SEC's 2010 enforcement cooperation program

Leone, Andrew J.; Li, Edward Xuejun; Liu, Meilin

doi:10.1016/j.jacceco.2020.101355

Cited by 14 publications

(17 citation statements)

References 32 publications

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“…Prior studies on financial misconduct have focused on whether or not an investigation occurs and the effect of this decision on regulatory enforcement. Files (2012) and Leone et al (2021) find that restatement firms that publicly disclose an internal investigation have a significantly higher likelihood of an SEC sanction (of 10% and 29%, respectively). Files et al (2019) also find that, for firms subject to SEC or DOJ enforcement, the choice to conduct an internal investigation is not a leading predictor of receiving cooperation credit.…”

Section: Impact Of Regulation On Internal Investigationsmentioning

confidence: 98%

Unraveling Financial Fraud: The Role of the Board of Directors and External Advisors in Conducting Independent Internal Investigations*

Files

Liu

2022

Contemporary Accting Res

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Although firms are encouraged by the SEC and Department of Justice to conduct internal investigations following financial misconduct, prior research finds few benefits for investigating firms. This study examines a novel aspect of internal investigations—namely, whether the investigation is conducted by independent versus nonindependent teams—and explores the impact of these teams on investigation outcomes. Consistent with our predictions, we find that firms whose internal investigations are led by independent teams are more likely to retain external advisors, have a higher likelihood of CEO turnover, and face a lower likelihood of an SEC enforcement action than do firms whose investigations are led by nonindependent teams. Our findings demonstrate that the SEC grants enforcement leniency to firms that conduct an internal investigation, but this finding only holds when the investigation leader is considered independent. These results also suggest that appointing independent groups to lead internal investigations protects the firm, at the expense of the CEO, following accounting fraud. Our paper has important implications for researchers studying accounting irregularities as we are the first to show that independent board members and external advisors play a direct role in the resolution of financial misconduct through their job on the internal investigation team.

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Section: Impact Of Regulation On Internal Investigationsmentioning

confidence: 98%

Unraveling Financial Fraud: The Role of the Board of Directors and External Advisors in Conducting Independent Internal Investigations*

Files

Liu

2022

Contemporary Accting Res

Self Cite

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“…Rather, it was a crude transaction of non-enforcement in exchange for compliance ritualism that saved criminal corporations losses they would have sustained under tougher enforcement. This reveals a problem with narrowly economistic theories of why deferred prosecutions are good policy in circumstances of enforcement swamping and scarce prosecutorial resources (as in Leone et al 2021). This is a general problem across a diversity of domains of corporate compliance.…”

Section: Restorative Justice Strengthens Deterrence Of Corporate Crime?mentioning

confidence: 99%

“…These neutralisations fell away quickly when they sat in the circle with victims and elders. These are the senses in which restorative justice theory married to the economics of responsive regulatory theory can offer a better explanation than the narrowly economic theory of deferred prosecutions in Leone et al (2021).…”

Section: Too Big To Fail; Too Big To Nail?mentioning

confidence: 99%

“…The trajectory of the data on the stringency of deferred prosecution agreements post Enron suggests the same pattern of evolution towards a market in lemons described for Australian enforceable undertakings since 1990. Leone et al (2021) created a cooperation score that combined corporate volunteering for self-investigation, timely reporting, prominent disclosure and the replacement of executives. Consistent with the Australian history, for the period 2002-10 (under the administration of George W. Bush), deferred prosecution negotiations left firms worse off: a 1 unit increase in a firm's cooperation score increased the probability of enforcement by 4.2 per cent and increased penalties by $2.04 million.…”

Section: Too Big To Fail; Too Big To Nail?mentioning

confidence: 99%

“…Consistent with the Australian history, for the period 2002-10 (under the administration of George W. Bush), deferred prosecution negotiations left firms worse off: a 1 unit increase in a firm's cooperation score increased the probability of enforcement by 4.2 per cent and increased penalties by $2.04 million. This result reversed during the Obama period of 2011-14, with 1 unit of higher cooperation reducing the odds of enforcement by 4.6 per cent and resulting in $2.55 million less in fines (Leone et al 2021). Firing allegedly culpable executives was particularly rewarding for firms during the Obama era, raising the scapegoating concerns that were such an issue in Fisse and Braithwaite (1993).…”

Section: Too Big To Fail; Too Big To Nail?mentioning

confidence: 99%

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Macrocriminology and Freedom

Braithwaite

2022

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A true magnum opus, Macrocriminology and Freedom is a thought provoking and generative book from one of criminology's intellectual giants. John Braithwaite reaches far and wide across societies, time, and disciplines to advance no less than a theory of how to build a society that simultaneously reduces both domination and crime. His ambitious ideas on cascades of non-dominating collective efficacy and crime prevention, for example, and their connections to social movements and political freedom, go well beyond usual criminological discourse. Chock full of theoretical propositions and bold insights, this a book that will keep criminologists busy for years. Macrocriminology and Freedom should not just be read, but better yet, savoured.' -Robert J. Sampson, Henry Ford II Professor of the Social Sciences, Harvard University 'In this majestic theorisation of the relationship between crime and freedom John Braithwaite isolates the unique power of macrocriminology as a lens through which to comprehend and challenge many of the fundamental crises facing our planet. Very few scholars have the breadth and overview to succeed in a mission of this order … Braithwaite does. This extraordinary book is an object lesson for all who seek to understand and resist domination and the crimes of power that flow from it.' -Penny Green, Professor of Law and Globalisation, Queen Mary University of London 'For over 40 years, John Braithwaite has been a voice of wisdom, hope and humanity in criminology. This dazzling new book weaves together all the main themes of his influential work, reanimating many of the core concepts of the discipline, as well as incorporating interdisciplinary resources from south and north, east and west, to produce an elegant and ambitious explanatory and normative account of crime as freedom-threatening domination. Decentring criminal justice as the solution to crime, Braithwaite shows that, on a global scale, the aspiration to tackle crimes, ranging from interpersonal violence through corporate crimes to ecocide, lies in the development of freedom-enhancing, power-tempering institutions in the political, economic and social spheres.' -Nicola Lacey, Professor of Law, Gender and Social Policy, London School of Economics 'Macrocriminology and Freedom is a criminological epic, an expansive and erudite story that sweeps across history and contexts. The book is frightening in showing how cascading events can produce catastrophes from crime to environmental destruction. But in the end, its message is hopeful, identifying pathways-or "normative rivers"-for guiding freedom from domination and crime. Drawing on his distinguished career, John Braithwaite has bestowed an extraordinary gift-a book, like other masterpieces, that will yield special insights each time we take an excursion through its pages.' -

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