Private and Public Control of Management
University of Toulouse 1 - Toulouse School of Economics (TSE)
Martijn A. Han
Humboldt University of Berlin
July 13, 2011
Amsterdam Center for Law & Economics Working Paper No. 2010-14
This paper investigates the design of a leniency policy to fight corporate crime. The manager may breach the law and report evidence to the authority. The shareholder writes the manager's incentive scheme and possibly reports evidence to the authority. The authority designs a leniency policy to deter fraud by both (i) exacerbating agency problems within non-compliant firms and (ii) alleviating them within compliant firms. Depending on the authority's ability to sanction the manager, it may be socially desirable to instigate a "within-firm race to the courthouse".
Number of Pages in PDF File: 54
Keywords: Corporate crime, white-collar crime, leniency, compliance, antitrust
JEL Classification: L20, K20, K42
Date posted: December 21, 2010 ; Last revised: July 23, 2012
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