The frequency of corporate misconduct: public enforcement versus private reality

Abstract

Purpose Perceptions about the frequency of misconduct – among the public, academics and even regulators – have largely been formed by examining enforcement statistics, which rely on the detection and sanctioning of the misconduct. This study aims to illuminate the real occurrence of corporate misconduct, much of which escapes public detection. Design/methodology/approach By examining confidential firm records describing misconduct within organizations, the author shows that public enforcement statistics significantly underestimate the amount of serious malfeasance that arises within firms. Findings Through analyzing records for several large multinational firms, the author finds that there are, on average, more than two instances of internally substantiated misconduct per week per firm. Originality/value Ultimately, this analysis illustrates the challenge of addressing corporate malfeasance within large organizations.