scholarly journals Political Connections and White-collar Crime: Evidence from Insider Trading in France

Author(s):  
Thomas Bourveau ◽  
Renaud Coulomb ◽  
Marc Sangnier

Abstract This paper investigates whether political connections affect individuals’ propensity to engage in white-collar crime. We identify connections by campaign donations or direct friendships and use the 2007 French Presidential election as a marker of change in the value of political connections to the winning candidate. We compare the behavior of Directors of publicly listed companies who were connected to the future President to the behavior of other non-connected Directors, before and after the election. Consistent with the belief that connections to a powerful politician can protect someone from prosecution or punishment, we uncover indirect evidence that connected Directors are more likely to engage in suspicious insider trading after the election: Purchases by connected Directors trigger larger abnormal returns, connected Directors are less likely to comply with trading disclosure requirements in a timely fashion, and connected Directors trade closer in time to their firms’ announcements of results.

Think India ◽  
2014 ◽  
Vol 17 (3) ◽  
pp. 22-24
Author(s):  
Sreekumar Ray

Since inception, the growth of the Indian stock market has been constrained through unethical, illegal and self-actualized activities of swanky persons involved in different capacities in the market. The stock market was trying to retrieve itself from the devastating effect of Harshad Mehta share market scam, when within a gap of ten years it was once again pushed into the darkness of the dungeon by another demon-child of the country- Ketan Parekh. Corporations have been looted by the insider traders, diversifying internal information to an external in lieu of cash. Investigations in the majority cases have proved the involvement of the high ranking officers of the companies in the crime, sophistically referred to as white-collar crime. It has an adverse impact on the growth and sustainability of the share market. Under the light of the above issue, this paper endeavors to study the impact of such crime on the share market. It focuses on the mechanism behind the insider-trading, its impact on the share market and the regulators supervision on the issue. Finally, suggestions have been provided which will contribute towards the dream of every Indian-a fraud-free share market focusing towards the overall development of the country.


2018 ◽  
Vol 56 (2) ◽  
pp. 303-336 ◽  
Author(s):  
Shichun Ling ◽  
Adrian Raine ◽  
Yaling Yang ◽  
Robert A. Schug ◽  
Jill Portnoy ◽  
...  

Objectives: A process model of white-collar crime postulates that the etiology of this form of crime is incomplete without consideration of individual differences in neurobiology. Based on prior research, this study tests the primary hypothesis that “gray-collar crime” (GCC; offending on the margin of more serious white-collar crimes) would be associated with increased frontal lobe volume. Secondary analyses explored which frontal subregions, if any, would be associated with gray-collar offending. Method: Gray-collar offending and blue-collar criminal offending were assessed in 129 community males. Total frontal lobe, anterior cingulate, superior frontal, middle frontal, inferior frontal, and orbitofrontal volumes were assessed using magnetic resonance imaging. Results: Increased frontal volume was associated with increased gray-collar offending. Frontal volume remained significant after controlling for ethnicity, age, intelligence, whole brain volume, and blue-collar crime covariates, explaining 4.6 percent of the variance in GCC. Within the frontal lobe, findings were localized to superior frontal and anterior cingulate cortex, both before and after controlling for covariates. Conclusions: Findings provide preliminary evidence of increased frontal volume as a neural correlate of gray-collar offending and support a process model which hypothesizes that frontal lobe volume may provide some individuals with an advantage in perpetrating criminal offenses in occupational and avocational settings.


Criminology ◽  
2020 ◽  
Author(s):  
Mary Dodge

The inclusion of gender in the field of white-collar crime represents a relatively new and challenging area of study and research. The existing information on this topic is scarce, though research is emerging at a steady pace on women who commit offenses and on victimology. Several reasons explain the lack of attention on women who commit white-collar crime and patterns of victimization. First, historical research on people who commit offenses focused on men because they committed the highest number of crimes. Illegal activities committed by women were viewed as aberrations that rarely occurred. Initial empirical studies and theories in criminology were developed based on young male delinquents who were engaged in the majority of offenses and white-collar crimes remained anonymous deeds that, historically, received little recognition. The trend to study males holds true, despite the rising number of females who have become involved in the criminal justice system. Young boys and men continue to outpace women on almost all criminal offenses. Second, women were engaged in domestic duties that hindered their participation in the workforce. As a consequence of their status as wives, mothers, and homemakers the crimes women committed were related to prostitution, shoplifting, welfare fraud, and embezzlement. Women had few opportunities to commit corporate or occupational white-collar crime. Though women fought to gain equal rights, particularly in the workplace, high-level positions in corporations were rare and the glass ceiling prevented advancement in many companies. Third, until the mid-1970s few feminist scholars were active in the fields of criminology and criminal justice, which stunted growth in the area. Finally, the debates over definitional issues and lack of access to large data sources on white-collar crime stymied research efforts. The problematic nature of deciding what actions constitute white-collar crime emerged almost immediately after Edwin Sutherland’s 1939 presidential address at the American Society of Sociology (later renamed the American Sociological Association). Sutherland argued that a huge portion of crime committed by respectable businessmen in positions of power was being ignored, despite the serious harm caused by their actions. The myopic attention on street-level crime resulted in societal, scholarly, and journalistic failures to acknowledge suite-level offenses and victims. While scholarly efforts to explore white-collar crime grew, the idea that women might be involved failed to emerge until 1975. Incidents of women committing white-collar crime were so rare that fraudulent schemes were the exception to the rule. Scholars noted that low-level white-collar offenses by women, such as embezzlement, may be worth investigating, though many people believed these actions represented pink-collar crimes. The lack of opportunity in male dominated corporate and professional realms resulted in few women who participated in, for example, insider trading, Ponzi schemes, or price-fixing. A few female scholars, however, recognized that the issue was not about gender and the ability to commit white-collar crime, but instead depended on opportunity.


2017 ◽  
Vol 9 (4) ◽  
pp. 450-474
Author(s):  
Joshua C. Hall ◽  
Serkan Karadas ◽  
Minh Tam Tammy Schlosky

Purpose Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, vesting the Securities and Exchange Commission with the clear legal authority to prosecute members of Congress (politicians) if they engage in insider trading. This paper aims to investigate whether members of Congress are informed traders even before they get elected to Congress, and thus helps assess whether the STOCK Act was a necessary piece of legislation. Design/methodology/approach This study compares the performance of politicians’ portfolios before and after they are elected to Congress using data from the 2004-2010 period. The authors use an event-study method to construct transactions-based calendar-time portfolios and use standard asset pricing models including capital asset pricing model (CAPM) to determine whether these portfolios earn abnormal returns (i.e. outperform the market). Findings The authors find weak and inconsistent evidence of abnormal returns in politicians’ portfolios that precede their election. They also find that it takes two consecutive terms in Congress for members to start making informed trades that earn themselves abnormal returns. However, these abnormal returns only accrue to those who serve on powerful committees. Research limitations/implications The results in this paper provide support for the STOCK Act of 2012 by showing that members of Congress become informed traders while they serve in Congress. However, these results do not imply any wrongdoing for members of Congress, because the paper uses the pre-STOCK Act data (2004-2010 period). Originality/value This study is the first academic work that compares politicians’ portfolios before and after they get elected.


2016 ◽  
Vol 23 (4) ◽  
pp. 1126-1139 ◽  
Author(s):  
Liang-Mui Tay ◽  
Chin-Hong Puah ◽  
Rayenda Khresna Brahmana ◽  
Nurul Izza Abdul Malek

Purpose The purpose of this paper is to investigate the connection between ethics and profitability by examining the association between published reports on white-collar crime and the share-price performance of the Malaysian-listed companies. This study aims to examine the role of white-collar crime in Malaysian-listed companies on its stock-price reaction. Design/methodology/approach Following prior research, even study methodology is used to exploit the stock-price reaction on the white-collar crime announcement. The daily bases of average abnormal returns (AARs) and cumulative average abnormal returns (CAARs) with an event window of 90 days prior to and after the announcements are determined. This study uses public announcement data of white-collar crimes from Malaysian Securities Commission from 1996 to 2013. Findings The finding indicates that an announcement of a white-collar crime has a negative abnormal return on the share price. As a result, the market does not react efficiently toward the information released regarding the incidence of a white-collar crime. Practical implications This study contributes to the managerial decision theory, where managers should be able to see a definite connection between unethical behavior and their firm’s stock. The stockholders and policymakers should find this information important in pressing for greater corporate and managerial accountability. Originality/value Unlike prior research, this paper investigates the stock-price performance due to white-collar crime announcement in the Malaysian context by using complete data set of announcement from 1996 to 2013.


Author(s):  
Mary Dodge

Women and white-collar crime is a topic that has, overall, received little attention in the literature. Initially, women were omitted from discussion and research because of their lack of participation, though some early commentary focused on victimization. When Edwin Sutherland first drew public and academic attention to white-collar crimes, few women were employed in positions that were conducive to commit elite crimes related to occupations or professions. According to Sutherland, white-collar crime involved professional men in positions of trust. From 1939 until the 1970s, work on white-collar offenders and offenses was male-centric, which included both scholarly researchers who were exploring the topic and males committing the majority of crimes. Corporations and respected professionals, not women, were presented with a multitude of opportunities to engage in white-collar crimes with little or no serious consequences. Primarily male corporate executives, politicians, and medical professionals committed white-collar crimes that included, for example, activities such as price fixing, insider trading, bribery, insurance fraud, and Ponzi schemes. Women, who lacked opportunity outside the private sphere of the home, were less involved in crime overall and certainly were in no position to commit white-collar offenses. In the 1940s and 1950s, female crime was typically viewed as promiscuous, aberrant, and male-like behavior. Eventually, in the mid-1970s as more women moved into the public sphere seeking employment, early predictions by female scholars suggested that an increased involvement in white-collar crime was inevitable. The types of crimes committed by women, as noted by pioneering female scholars, were likely to expand beyond prostitution, check kiting, and shoplifting to white-collar offenses as opportunities became increasingly available in the public sphere. Gender inequality in most criminal endeavors continues to exist and more recent debates continue about the role of women in white-collar crime.


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