Cycles of corporate fraud: a behavioural economics approach
Cycles of corporate fraud: a behavioural economics approach
We analyse the combined effects of economic, behavioural, psychological, emotional, and psycho-analytical factors on managerial propensity to commit corporate fraud. Becker (1973) suggested that criminals and fraudsters perform a fully-rational cost-benefit analysis of crime commission, an approach which advocates tougher financial regulation and stronger punishment threats to deter crime. Meanwhile, behavioural economics and Freudian psycho-analysis proposes that behavioural, psychological and emotional factors play a key role in the incidence of corporate fraud. We develop a behavioural game-theoretical and Freudian psycho-analytical framework of corporate fraud and consider the effect of a Freudian super-ego, acting as a moral compass, on managerial fraud. Furthermore, we analyse the contagious spread of fraud across an organisation from unethical to ethical managers. The chapter concludes with an in-depth discussion of how policy makers are beginning to appreciate and incorporate the behavioural economics approach in developing policies to address corporate fraud.
corporate culture, Fraud, fraud detection, behavioural bias, board accountability, regulatory failure
367-401
Marnet, Oliver
6840910e-2e26-4e63-aa84-76c5c8d27877
Fairchild, R.G.
7d82ce3f-9755-4142-97fd-134e1edbf14b
14 November 2022
Marnet, Oliver
6840910e-2e26-4e63-aa84-76c5c8d27877
Fairchild, R.G.
7d82ce3f-9755-4142-97fd-134e1edbf14b
Marnet, Oliver and Fairchild, R.G.
(2022)
Cycles of corporate fraud: a behavioural economics approach.
In,
Marnet, Oliver
(ed.)
Research Handbook on Corporate Board Decision-Making.
London.
Edward Elgar Publishing, .
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Book Section
Abstract
We analyse the combined effects of economic, behavioural, psychological, emotional, and psycho-analytical factors on managerial propensity to commit corporate fraud. Becker (1973) suggested that criminals and fraudsters perform a fully-rational cost-benefit analysis of crime commission, an approach which advocates tougher financial regulation and stronger punishment threats to deter crime. Meanwhile, behavioural economics and Freudian psycho-analysis proposes that behavioural, psychological and emotional factors play a key role in the incidence of corporate fraud. We develop a behavioural game-theoretical and Freudian psycho-analytical framework of corporate fraud and consider the effect of a Freudian super-ego, acting as a moral compass, on managerial fraud. Furthermore, we analyse the contagious spread of fraud across an organisation from unethical to ethical managers. The chapter concludes with an in-depth discussion of how policy makers are beginning to appreciate and incorporate the behavioural economics approach in developing policies to address corporate fraud.
Text
CyclesofCorporateFraud
- Author's Original
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Published date: 14 November 2022
Keywords:
corporate culture, Fraud, fraud detection, behavioural bias, board accountability, regulatory failure
Identifiers
Local EPrints ID: 472661
URI: http://eprints.soton.ac.uk/id/eprint/472661
PURE UUID: f521f8aa-fb3c-4f7d-812f-b2d045776a17
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Date deposited: 13 Dec 2022 17:45
Last modified: 17 Mar 2024 03:33
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Contributors
Author:
R.G. Fairchild
Editor:
Oliver Marnet
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