| By: |
Paolo Polidori (Department of Law, University of Urbino “Carlo Bo”);
Désirée Teobaldelli (Department of Law, University of Urbino “Carlo Bo”) |
| Abstract: |
Corporate criminal liability legislation has been the subject of a widespread
debate around the world in response to the financial scandals of the early
2000s. The existing legal regimes en- tail compliance requirements, such as
internal monitoring mechanisms, with the aim of inducing firms to detect the
wrongful conduct of their agents. We develop an analytical framework to
address when and to what extent firms may find convenient to adopt these
regulatory devices. We conclude that more productive firms and those operating
in sectors where managers have more opportunities to undertake criminal
activities are more likely to prevent such activities (through monitoring or
the payment of e¢ ciency wages). When the potential returns of ille- gal
activities are high or when the firms are large, implementing internal
monitoring devices may be optimal, while smaller firms should generally prefer
the payment of efficiency wages to prevent crimes by managers. |
| Keywords: |
Corporate Governance, Law Enforcement, Compliance, Deterrence, Regulation. |
| JEL: |
K22 K42 G34 G38 L50 |
| Date: |
2012 |
| URL: |
http://d.repec.org/n?u=RePEc:urb:wpaper:12_16&r=law |