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For many years, law and economics scholars, as well as politicians and regulators, have debated whether corporate punishment chills beneficial corporate activity or, in the alternative, lets corporate criminals off too easily. A crucial and yet understudied aspect of this debate is empirical evidence. Unlike most other types of crime, the government does not measure corporate crime rates; therefore, the government and researchers alike cannot easily determine whether disputed policies are effectively deterring future incidents of corporate misconduct. In this Article, we take important first steps in addressing these questions. Specifically, we use three novel sources as proxies for corporate crime: the Financial Crimes Enforcement Network (FinCEN) Suspicious Activity Reports (SARs), consumer complaints made to the Consumer Financial Protection Bureau (CFPB), and whistleblower complaints made to the Securities and Exchange Commission (SEC). Each source reveals an increase in complaints or reports indicative of corporate misconduct over the past decade. We also examine levels of public company recidivism and find that they are likewise on the rise. And we document a potential explanation: recidivist companies are much larger than nonrecidivist companies, but they receive smaller fines than non-recidivist companies (measured as a percentage of market capitalization and revenue). We conclude by offering recommendations for enforcement agencies and policymakers. In particular, our results suggest that enforcers are unlikely to achieve optimal deterrence using fines alone. Enforcement agencies should therefore consider other ways of securing deterrence, such as by seeking penalties against guilty individuals and the top executives who facilitate their crimes.


Business Organizations Law | Law


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