Corporate Lobbying and Fraud Detection: Revisited

49 Pages Posted: 20 Aug 2015 Last revised: 19 Apr 2016

See all articles by Matthew McCarten

Matthew McCarten

University of Otago - School of Business

Ivan Diaz-Rainey

University of Otago - School of Business

Helen Roberts

University of Otago - Department of Accountancy and Finance

Eric K. M. Tan

University of Queensland - Business School

Date Written: April 19, 2016

Abstract

This paper re-examines the size of penalties following securities class actions and the impact of lobbying on the time it takes to detect managerial misconduct. Managers of lobbying firms are able to get away with misconduct for longer and are marginally less likely to have to settle a class action up to 2004. From 2005, lobbying no longer impacts the time it takes to detect misconduct or the outcome of the case. Our findings suggest that the tacit power of lobbying firms has decreased over time and the most likely explanation for this is the enactment of SOX.

Keywords: Securities class actions; Lobbying; Sarbanes-Oxley Act; Tacit Power

JEL Classification: G18, G38, K22

Suggested Citation

McCarten, Matthew and Diaz-Rainey, Ivan and Roberts, Helen and Tan, Eric K. M., Corporate Lobbying and Fraud Detection: Revisited (April 19, 2016). Available at SSRN: https://ssrn.com/abstract=2647829 or http://dx.doi.org/10.2139/ssrn.2647829

Matthew McCarten (Contact Author)

University of Otago - School of Business ( email )

Dunedin
New Zealand

Ivan Diaz-Rainey

University of Otago - School of Business ( email )

Dunedin
New Zealand

Helen Roberts

University of Otago - Department of Accountancy and Finance ( email )

PO Box 56
Dunedin, 9054
New Zealand
6434798072 (Phone)
6434798171 (Fax)

Eric K. M. Tan

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

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