Fraud and Financial Scandals: A Historical Analysis of Opportunity and Impediment

30 Pages Posted: 24 Nov 2015 Last revised: 27 Apr 2016

Steve Toms

University of Leeds - Leeds University Business School (LUBS); University of Leeds - Division of Accounting and Finance

Date Written: November 24, 2015

Abstract

The paper presents a conceptual framework of financial fraud based on the historical interaction of opportunity and impediment. In the long run the character of opportunity is determined by the technical characteristics of assets and their unique, unknowable or unverifiable features. Impediment is promoted by consensus about the real value of assets, such that through active governance processes, fraudulent deviations from real value can be easily monitored. Active governance requires individuals in positions of responsibility to exercise a duty of care beyond merely being honest themselves. Taking a long run historical perspective and reviewing a selection of British financial frauds and scandals, from the South Sea Bubble to the Global Financial Crisis, the paper notes the periodic occurrence of waves of opportunity and the evolutionary response of passive governance mechanisms.

Keywords: Financial fraud, South Sea Bubble, Railway Mania, Royal Mail Steam Packet, Slater Walker, Polly Peck, Global Financial Crisis

JEL Classification: M41, M42, M48, N23, N24, N83, N84

Suggested Citation

Toms, Steve, Fraud and Financial Scandals: A Historical Analysis of Opportunity and Impediment (November 24, 2015). Leeds University Business School Working Paper No. 16-01. Available at SSRN: https://ssrn.com/abstract=2694962 or http://dx.doi.org/10.2139/ssrn.2694962

Steve Toms (Contact Author)

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

Paper statistics

Downloads
164
Rank
151,224
Abstract Views
654