The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance: Evidence from 1993-2013

60 Pages Posted: 27 Aug 2014 Last revised: 20 Nov 2014

See all articles by Wulf A. Kaal

Wulf A. Kaal

University of St. Thomas, Minnesota - School of Law

Timothy Lacine

University of St. Thomas

Date Written: August 25, 2014

Abstract

Non- and Deferred Prosecution Agreements (N/DPAs) are controversial because prosecutors, not judges or the legislature, are changing the governance of leading public corporations and entire industries. To analyze N/DPAs’ corporate governance implications and provide policy makers with guidance, the authors code all publicly available N/DPAs (N=271) from 1993 to 2013, identifying 215 governance categories and subcategories. The authors find evidence that the execution of N/DPAs is associated with significant corporate governance changes. The study categorizes mandated corporate governance changes for entities that executed an N/DPA as follows: (1) Business Changes, (2) Board Changes, (3) Senior Management, (4) Monitoring, (5) Cooperation, (6) Compliance Program, and (7) Waiver of Rights. The authors supplement the analysis of governance changes in these categories with a more in depth evaluation of the respective subcategories of governance changes. The authors also code and analyze preemptive remedial measures, designed by corporations to preempt the execution of an N/DPA or corporate criminal indictment. The paper evaluates the implications of the empirical evidence for boards, management, and legal practitioners.

Keywords: Non Prosecution Agreement, Deferred Prosecution Agreement, Panel Data, Corporate Governance

JEL Classification: G3, K14, K22

Suggested Citation

Kaal, Wulf A. and Lacine, Timothy, The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance: Evidence from 1993-2013 (August 25, 2014). The Business Lawyer , Vol. 70, 2014. Available at SSRN: https://ssrn.com/abstract=2486570 or http://dx.doi.org/10.2139/ssrn.2486570

Wulf A. Kaal (Contact Author)

University of St. Thomas, Minnesota - School of Law ( email )

MSL 400, 1000 La Salle Avenue
Minneapolis, MN Minnesota 55403-2005
United States

Timothy Lacine

University of St. Thomas ( email )

2115 Summit Avenue
Saint Paul, MN 55105
United States

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