Work-from-Home and the Risk of Securities Misconduct

European Financial Management, Forthcoming

47 Pages Posted: 27 Apr 2023

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University; Birmingham Business School; European Corporate Governance Institute (ECGI)

Chris Firth

University of Warwick - Warwick Business School

John Gathergood

University of Nottingham - School of Economics

Neil Stewart

University of Warwick - Warwick Business School

Date Written: April 5, 2023

Abstract

In the wake of the global pandemic, a challenge for CEOs and boards is to set a stakeholder-acceptable organizational balance between remote and traditional office working. However, the risks of work-from-home are not yet fully understood. We describe competing theories that predict the effect on misconduct of a corporate shift to work-from-home. Using internal bank data on securities traders we exploit lockdown variation induced by emergency regulation of the Covid-19 pandemic. Our difference-in-differences analysis reveals that working from home lowers the likelihood of securities misconduct; ultimately those working from home exhibit fewer misconduct alerts. The economic significance of these changes is large. Our study makes an important step toward understanding the link between the balance of work locations and the risk that comes with this tradeoff.

Keywords: securities misconduct, surveillance, fraud, work-from-home, risk management

JEL Classification: G12, G14, G18, K22

Suggested Citation

Cumming, Douglas J. and Firth, Chris and Gathergood, John and Stewart, Neil, Work-from-Home and the Risk of Securities Misconduct (April 5, 2023). European Financial Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4428145

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/douglas-cumming

Chris Firth (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

John Gathergood

University of Nottingham - School of Economics ( email )

Sir Clive Granger Building
University Park
Nottingham, NG7 2RD
United Kingdom

HOME PAGE: http://https://sites.google.com/site/gathergoodjohn/

Neil Stewart

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

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