Control Frauds as Financial Super-Predators: How 'Pathogens' Make Financial Markets Inefficient
William K. Black
University of Missouri at Kansas City - School of Law
April 15, 2010
White-collar criminology scholarship shows that “accounting control frauds” (frauds led by the CEO) use accounting fraud to deceive (or suborn) sophisticated financial market participants. Large control frauds cause greater financial losses than all other forms of property crimes combined. Weak regulation, supervision and ethics produce epidemics of control fraud that cause systemic economic damage. As with the natural world, these financial super predators act like pathogens that take over a firm and act as a “vector” to cause even greater damage. Control fraud theory poses a major challenge to the efficient markets hypothesis and the resulting praxis that devalues financial regulation.
Number of Pages in PDF File: 45
Keywords: control fraud, lemon markets, fraud, regulation, efficient markets
JEL Classification: D21, D43, D82, G18, G28, G38, K22, K42, L51, M42, O16, O17working papers series
Date posted: April 16, 2010
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