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The frequency of corporate misconduct: public enforcement versus private reality

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Purpose

Perceptions about the frequency of misconduct – among the public, academics and even regulators – have largely been formed by examining enforcement statistics, which rely on the detection and sanctioning of the misconduct. This study aims to illuminate the real occurrence of corporate misconduct, much of which escapes public detection.

Design/methodology/approach

By examining confidential firm records describing misconduct within organizations, the author shows that public enforcement statistics significantly underestimate the amount of serious malfeasance that arises within firms.

Findings

Through analyzing records for several large multinational firms, the author finds that there are, on average, more than two instances of internally substantiated misconduct per week per firm.

Originality/value

Ultimately, this analysis illustrates the challenge of addressing corporate malfeasance within large organizations.

Keywords: Bribery; Fraud

Document Type: Research Article

Affiliations: Department of Business Administration, Harvard Business School, Boston, Massachusetts, USA

Publication date: October 7, 2019

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