Are Large Corporate Fines Levied on the Right Party and Do They Have Long Term Negative Consequences?

Abstract:     
In the past twenty years, large corporate fines have been levied on U.S. businesses - in effect on the shareholders who today in the main have no meaningful say in the management of the enterprise. In many such instances, no corporate officers have been charged with a crime, and often appear only too happy to utilize corporate (shareholder) funds to pay the fines for their corporate actions. This paper explores management’s responsibilities under ‘Agency Theory,’ ‘The Honest Services (Work) Law’ and ‘The Responsible Corporate Officer Doctrine.’ The paper concludes as to whether the use of corporate funds by management in the payment of large fines has a negative impact on stock prices.

Number of Pages in PDF File: 14

Keywords: SEC, SOX, Honest Services, Agency Theory, Responsible Corporate Officer, Fines, Dodd-Frank, Fraud, KIDD

working papers series