Abstract

https://ssrn.com/abstract=2804352
 


 



Why Don’t General Counsels Stop Corporate Crime?


Sureyya Burcu Avci


University of Michigan, Stephen M. Ross School of Business

H. Nejat Seyhun


University of Michigan, Stephen M. Ross School of Business

July 3, 2016

Ross School of Business Paper No. 1326

Abstract:     
Corporate fraud is costly, involving hundreds of billions of dollars in lost reputational and out of pocket costs for stakeholders and hundreds of thousands of job losses for employees, suppliers and customers as well as loss of lives. To prevent fraud, general counsels (GCs) are charged as the gatekeepers for the corporation. They understand the law and they are expected to use their legal expertise to advise, intervene and report whenever they are suspicious of fraud. In spite of their legally-mandated central role, however, corporate counsels typically do not appear to discover any corporate wrongdoing. In this paper, we analyze the potential reasons why corporate counsels keep silent in the face of potential wrongdoing in their own firms and propose policy recommendations to better protect shareholders’ interests against self-dealing by top management.

Number of Pages in PDF File: 46

Keywords: General Counsels, Corporate Governance, Corporate Fraud, Gatekeepers

JEL Classification: G34, G38, K22, K41, K42


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Date posted: July 8, 2016 ; Last revised: August 17, 2016

Suggested Citation

Avci, Sureyya Burcu and Seyhun, H. Nejat, Why Don’t General Counsels Stop Corporate Crime? (July 3, 2016). Ross School of Business Paper No. 1326. Available at SSRN: https://ssrn.com/abstract=2804352 or http://dx.doi.org/10.2139/ssrn.2804352

Contact Information

Sureyya Burcu Avci (Contact Author)
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-747-0219 (Phone)

H. Nejat Seyhun
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-5463 (Phone)

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