Deterring white-collar crime

Abstract

Executive Overview Fifty percent of American households, over 80 million people, support corporations by purchasing and owning stock. The trust and confidence these individuals have placed in the corporate world, boards of directors, managers, the stock market, regulatory bodies, the laws, and politicians have in recent years been damaged by a series of abuses, scams, indictments, and business scandals. No set of regulations, laws, and reforms can totally eliminate business scandals and white-collar crime. However, steps can be taken to reassure the public and to signal to white-collar employees that offenses, fraud, and malfeasance will not be tolerated and will result in serious consequences. In this article we offer practical, meaningful, and enforceable recommendations that involve managers as a group, accounting system reform, governance processes, and sanctions and punishments for white-collar criminals. Primarily needed are specific changes and reforms, visible managerial action, the enforcement of current laws, and, when necessary, severe and publicized punishments for convicted white-collar criminals.