66 Pages Posted: 8 Jun 2017 Last revised: 3 Aug 2017
Date Written: June 2, 2017
As illustrated by the 2015-17 Volkswagen emissions scandal and other large-scale corporate wrongdoing, we have created a ‘don’t ask, don’t tell’ system for corporate crime. By relying on disclosure-based regulation for prosecutions, we teach business organizations and top executives with disclosure duties to be willfully blind to what is happening inside their organizations. Under pressure for results without inquiry into methods, middle management is able to coordinate large-scale wrongdoing without consequence. Meanwhile, increasingly diverse and mandatory disclosure requirements, which place an enormous financial burden on companies, are not actually giving us the results that we want.
This Article proposes a new approach to prevent large-scale corporate wrongdoing. Instead of businesses, regulators should have the financial obligation of analyzing information about large-scale crimes, and in exchange have access to patterns in reports suppressed or not necessarily available at the entity level.
Keywords: Volkswagen, VW, multinational, scandal, emissions, defeat device, disclosure-based regulation, emissions-control, case study, middle management, management, insulation, coordination, fraud, large-scale wrongdoing, whistleblower, dissent, cat-and-mouse game, repeat behavior
JEL Classification: K2, K22, K14, K42, M14, M2, R14, Z1, Z13, Z18, P43, P46, P48
Suggested Citation: Suggested Citation
Nelson, J.S., 'Don't Ask, Don't Tell' Corporate Crime (June 2, 2017). Available at SSRN: https://ssrn.com/abstract=2979728