Promotion-based incentives and corporate fraud

Finance

Further details

This paper extends previous corporate fraud literature by investigating an additional incentive for committing securities fraud. Previous literature focused mainly on equity-based incentives and found mixed evidence about the effects of equity-based incentives on the likelihood of fraud. We study the impact of promotion-based incentives on the propensity of fraud, as predicted by both economic and behavioral theory. We find a significantly positive relationship between promotion-based incentives and the likelihood of alleged securities fraud. Overall, these findings indicate that promotion-based incentives are an important influencing factor for committing fraud.

Please find a copy of the full paper here: www.dropbox.com/s/yhdmg4a45metigd/Exeter%20paper.pdf