The John M. Olin Center

Paper Abstract

Untitled Document

88. Masaki Iwasaki, A Model of Corporate Self-Policing and Self-Reporting, 09/2019.

Abstract: What are the effects of corporate self-reporting schemes on deterrence of corporate crime? This paper presents a model to analyze this question for the case in which a firm’s manager, who has stock-based compensation, commits a corporate crime and the firm conducts self-policing and self-reporting. Corporate self-reporting schemes may enhance deterrence if the level of corporate leniency is within a certain range. But the level of corporate leniency has a non-monotonic relationship with deterrence in that range: as the level of corporate sanctions decreases, receding from the upper limit of the range, the probability of crime occurring first decreases and then increases.