Collaborative Research: The Extent and Underlying Cause(s) of Corporate Malfeasance in US Corporations

Texas A&M Research Foundation, College Station TX

Investigators

Abstract

Currently there is not research that provides a systematic explanation for U.S. corporate malfeasance and why it has escaped early detection by governmental oversight agencies. The PIs will explore whether changes in regulatory law during the latter half of the 20th century have allowed corporate characteristics to develop that encourage and reward malfeasance. Specifically, the research will investigate whether working malfeasance has been steadily increasing, reaching its maximum in recent years. They will first quantify over time the frequency and kinds of corporate malfeasance by conducting univariate and bivariate analyses of the largest 500 U.S. corporations. Second they will identify the cause(s) of corporate malfeasance. The PIs hypothesize that the emergence of multilayer-subsidiary corporate form and the irregularities it encourages are responsible. Using discrete time event history analysis and Possion regression the PI will be used to test several specific hypotheses. The research is innovative in that it addresses under-investigated aspects of corporations that have great potential importance as the underlying causes of malfeasance. The study also extends beyond previous studies of corporate malfeasance, which disproportionately focused on the contributions of individuals to malfeasance, examined only those social acts that have been identified as a crime, or did not examine the effects of change to the multilayer-subsidiary corporate form. Research findings can contribute to helping us better understand corporate malfeasance and provide evidence-based changes in preventive regulatory policy will become possible. Society as a whole would benefit economically if corporate malfeasance could be substantially reduced or eliminated. The damage done to the U.S. economy and the financial security of individuals as a consequence of recent corporate malfeasance has been enormous. To assure maximal benefit from the proposed studies, the results will be disseminated widely through presentation at meetings, publication in peer reviewed journals, and distribution to relevant governmental regulators. Teaching and learning will be an integral part of the research. For example, the results will be included in the investigators' scholarly and public lectures, and both undergraduate and graduate students will be involved in developing the data. Historically, the numbers of students from underrepresented groups have been disproportionately high in the principal investigator's research programs. The intent is to continue that recruitment approach.