Government subsidies and corporate fraud
Abstract/Contents
- Abstract
- I study the relation between firms' receipt of significant subsidies and their subsequent propensities to engage in -- and be caught engaging in -- financial fraud. Firms that receive subsidies are likely to have greater influence over the legislators who award these subsidies, relative to nonrecipient firms, but are also more likely to be subject to external scrutiny. I first develop a three-player model between a firm and two types of regulators that captures these tensions and empirically examine the model's main predictions. Consistent with regulatory capture, I find that firms receiving tax breaks tend to engage in fraud more frequently relative to nonrecipient firms. However, there is an inverse relation between the value of tax breaks that a firm receives and the likelihood that the firm engages in fraud. Conversely, firms that receive direct cash grants or below-market-rate access to resources do not on average engage in fraud any more or less frequently relative to firms that do not receive such grants. My findings provide insight into the relation between regulatory capture and financial fraud, and suggest that recent standard-setters' recommendations for additional subsidy disclosures by both governments and firms could provide useful information for both policymakers and investors.
Description
| Type of resource | text |
|---|---|
| Form | electronic; electronic resource; remote |
| Extent | 1 online resource. |
| Publication date | 2017 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Associated with | Raghunandan, Aneesh |
|---|---|
| Associated with | Stanford University, Graduate School of Business. |
| Primary advisor | McNichols, Maureen, 1953- |
| Thesis advisor | McNichols, Maureen, 1953- |
| Thesis advisor | Beyer, Anne |
| Thesis advisor | De Simone, Lisa |
| Advisor | Beyer, Anne |
| Advisor | De Simone, Lisa |
Subjects
| Genre | Theses |
|---|
Bibliographic information
| Statement of responsibility | Aneesh Raghunandan. |
|---|---|
| Note | Submitted to the Graduate School of Business. |
| Thesis | Thesis (Ph.D.)--Stanford University, 2017. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2017 by Aneesh Raghunandan
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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