Examining 21st Century Corporate Financial Fraud: Preliminary Findings From SEC Filings

• In Event: Financial And Economic Crimes: Detecting, Investigating, And Responding To Occupational And Corporate Fraud

Abstract

Corporate financial fraud arguably represents the nation’s foremost white-collar crime problem, yet little research on it exists. What are the characteristics of US public firms and their top executives involved in corporate financial fraud? Systematic data to address this question are scarce. Our study will assemble a unique comprehensive data set on organizational and executive corporate financial frauds, focusing on Security and Exchange Commission enforcement actions involving securities fraud and fraudulent accounting practices by U.S. public corporations (2005-2010). We hand-collect rich offense and offender details on all SEC securities law violations using archived case materials and enforcement releases, bulletins, and press releases to record whether the firm and/or its top executives were the subject of administrative action or civil litigation. We develop statistical portraits of firms and their top-level executives involved in corporate financial fraud. Profiles include industry, organizational characteristics (e.g., firm structure, governance, executive compensation), and executive characteristics (e.g., demographics, background, compensation).

Authors

• Jennifer Schwartz, Washington State University

• Darrell Steffensmeier, Pennsylvania State University