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'Don't Ask, Don't Tell' Corporate Crime

66 Pages Posted: 8 Jun 2017 Last revised: 3 Aug 2017

J.S. Nelson

Villanova Law School; Villanova School of Business; The Wharton School, University of Pennsylvania

Date Written: June 2, 2017

Abstract

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

Nelson, J.S., 'Don't Ask, Don't Tell' Corporate Crime (June 2, 2017). Available at SSRN: https://ssrn.com/abstract=2979728

Josephine Sandler Nelson (Contact Author)

Villanova Law School ( email )

299 N. Spring Mill Road
Villanova, PA 19085
United States

Villanova School of Business ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States

The Wharton School, University of Pennsylvania ( email )

3730 Walnut Street
Room 668 Jon M. Huntsman Hall
Philadelphia, PA 19104-6340
United States

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