Stabsseminar på fredag

Institutt for foretaksøkonomi har stabsseminar på fredag. Seminaret er ved
Scott Lee, Texas A&M. Temaet er "Penalizing Corporate Misconduct: Empirical Evidence"

06.05.2004 - Stig Nøra

Tid: Fredag 7. mai klokken 12.15-13.30

Sted: Auditorium D

Abstract
As its name implies, the Foreign Corrupt Practices Act (FCPA) outlaws
bribery of foreign officials by U.S. corporations. More important,
however, are the broad powers that the FCPA grants to regulators for
disciplining financial misrepresentations by firms that list their
securities in the United States. Recently, the Sarbanes-Oxley Act has
raised corporate disclosure and auditing standards, but the guidelines
for penalizing corporations and their executives for financial fraud
remain fundamentally rooted in their 1977 FCPA origins.
FCPA-related powers have been employed in 604 enforcement actions
against publicly-traded corporations from the Act's inception in 1977
through 2002. A mere 7% of these actions relate to foreign bribery, and
bribery-related enforcement actions typically carry small penalties. In
contrast, actions pertaining to financial reporting standards are both
more frequent and more heavily penalized. Firms and individuals have
been fined a total of $12.1 billion, and 66 managers have received jail
sentences.
Market imposed penalties dwarf the legal penalties associated with
financial reporting violations. The initial announcement of an
FCPA-related financial reporting action results in a mean abnormal
return of -10.3% for the defendant firm. This augments a 20.1% loss in
share value that accompanies prior events - such as unforeseen executive
turnover or asset write-downs - that trigger FCPA-related
investigations. Nearly half of these losses can be attributed to
impaired operations or lost reputation from the misrepresentations. This
evidence belies a widespread view that corporate misdeeds are
disciplined lightly. Furthermore, such penalties are not applied
indiscriminately, as both legal and reputational penalties are related
to the harms imposed by the violations.

Paper er tilgjengelig på http://depts.washington.edu/cfoforum/MisconductPaper.doc

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