“Because That's Where the Money Is”: A Theory of Corporate Legal Compliance

The Journal of Business, Entrepreneurship & the Law, Sep 2015

The study and regulation of firms per se as agents of compliance may be misguided. Firms are abstractions that exist only in the legal, and not the natural, sense, and, as such, utterly lack decisional capacity. Firms do not decide whether to comply with law; people, specifically officers who exercise decisional authority on their behalf, do. Any theory that would explain or predict firm compliance must account for the individual level of analysis. However, most corporate legal compliance research minimizes the salience of personality. Accordingly, Part II traces associations between personalities of CEOs and firm compliance with obligations arising under corporate law. Part III presents historical data to test heuristically the proffered theory and offer explanations and predictions of firm behaviors regarding corporate legal compliance (CLC). Part IV, followed by a Conclusion, anticipates criticisms and suggests future research to build upon evidence that selection of CEOs on the basis of CLC propensities bears on firm survivability and prosperity, as well as on the orderly and legitimate function of the political economy.

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“Because That's Where the Money Is”: A Theory of Corporate Legal Compliance

e Journal of Business “Because Th at's W here the Money Is”: A Theor y of Corporate Legal Compliance William C. Bradford 0 0 William C. Bradford, “Because Th at's Where the Money Is”: A Th eory of Corporate Legal Compliance , 8 J. Bus. Entrepreneurship & L. 337 (2015) Available at: Part of the Business Organizations Law Commons; and the Law and Psychology Commons WILLIAM C. BRADFORD I. INTRODUCTION Upon his capture in 1934, legendary bank robber Willie Sutton was asked by FBI agents, “Why do you rob banks, Willie?” Sutton, regarding the question as rhetorical, replied, dryly, “Because that’s where the money is.”1 In other words, Sutton understood the inquiry to be why he robbed banks rather than homes, or gas stations, or church offering plates. Had he understood it as intended—what was it about Willie Sutton that impelled Willie Sutton to crime when others, struggling to survive the Great Depression, were not?—Sutton could not have offered so pithy a response. This Article poses a similar question—”Why do you rob corporations?”—to ten chief executive officers (CEOs) ensnared in circumstances analogous to Sutton’s in the hope of generating answers more useful to the explanation, prediction, and suppression of corporate crime than “because that’s where the money is.” In the last dozen years, scandals involving insider trading, accounting fraud, fictional business entities, bribery, lavish perquisites, and outright theft destroyed over $1 trillion in shareholder value, eliminated millions of jobs, and felled corporate giants. Outrage at these breaches of the public trust prompted prosecutors to imprison many executives and Congress to impose yet stricter obligations upon public firms and the individuals who run them. The SarbanesOxley Act (SOX), enacted in 2002, enhanced civil and criminal penalties for a wide array of corporate misdeeds and imposed duties of transparency, honesty, and accountability upon key firm personnel. Each CEO and chief financial officer (CFO) must certify the truthfulness of each financial report on pain of perjury and disclose on a “rapid and current basis such additional information . . . [as] is necessary or useful for the protection of investors[,] and in the public interest,” in-house counsels must now report to CEOs and boards of directors any evidence of a material violation of any Securities and Exchange Commission (SEC) law or regulation as well as any breach of a fiduciary duty to shareholders, and public accounting firms must certify the accuracy of financial reports.2 Although SOX is associated with a sordid parade of handcuffed executives “perp walking” to prison, it may come to be better remembered as the machine that privatized public firms. As much as a quarter of every dollar a public firm earns is consumed complying with a panoply of laws and regulations. SOX has cost firms $4 trillion, driven capital away from riskier firms, deterred mergers and acquisitions, and increased the compliance burden fivefold.3 While some hail SOX as a significant weapon in the battle against corporate crime, others believe its price for reducing managerial malfeasance is far too dear. Other tools have been tried. Many post-“Enron Era” firms tout their 1 See WILLIE SUTTON, WHERE THE MONEY WAS (1970). 2 Sarbanes-Oxley Act of 2002 (SOX), PUB. L. 107-24, 116 Stat. 745 (July 30, 2002), at §§ 302, 309, 404(b). 3 David Henry, Will Directors Morph Into Corporate Constables?, BUSINESS WEEK, June 14, 2004, at 38. compliance management programs (CMPs), which consist of written codes of ethics, protections for whistleblowers, and employee training, as proof against future criminality. Regulators have encouraged this trend, reducing liability for firms that implement CMPs.4 Still, many view CMPs as cynical attempts to pose firms as corporate good citizens and reduce regulatory oversight without requiring behavioral transformation. Indeed, many of the more egregious offenders had robust CMPs in place. Other reform proposals, including enhanced balance sheet transparency, ethics classes, and more independent boards of directors, have been hastened into the breech, yet corporate crime endures. This should come as scant surprise: over the centuries, commentators have complained that “laws are like spider webs, which may catch small flies but let the wasps and hornets break through.” Inducing compliance with the legal regimes they craft has long been the thorniest problem facing legal architects, as: The mere existence of a rule, a law, a moral standard, a social norm, or any other behavioral prescription does not guarantee that those subject to it will actually comply with it . . . [and] [e]ven those who acknowledge the authoritativeness and generally favor the existence of [laws] frequently find it advantageous to violate them in practice.5 Indeed, noncompliance can be profitable. Corporate executives experience tremendous financial incentives to cheat. Managers feeling pressure to produce results are perfectly positioned to cook the books and audits, thus boards of directors and government regulators cannot hope to amass enough timely information to identify and address every incidence of noncompliance. Executives of U.S. firms operating overseas feel pressure to pay bribes lest they lose business to non-U.S. rivals who are not prohibited from doing so. One would be naïve to believe SOX or any other legislation could relieve these pressures. One might conclude corporate criminality is eternal and recent exemplars are remarkable only insofar as one beholds their magnitude. Still, noncompliance is an ethical cancer that drives away investment, destroys firms, and compromises sustained domestic growth. Simply put, noncompliance is bad for business, for the firm, and for the nation. Yet, as injurious as noncompliance is, and despite all the measures instituted to combat it, the phenomenon is ubiquitous. At least two-thirds of public firms have engaged in serious illegal conduct in the past decade.6 Is law simply 4 Ellen S. Podgor, Educating Compliance, 46 AM. CRIM. L. REV. 1523, 1534 (2009). 5 ORAN R. YOUNG, COMPLIANCE AND PUBLIC AUTHORITY, 1 (1979). “Compliance” refers to adherence to and conformance by relevant actors with the prescriptions and proscriptions of the behavioral regime established by the state in respect to a particular issue-area. Id. at 3. 6 Saul W. Gellerman, Why Good Managers Make Bad Ethical Choices, in LEADERSHIP AND epiphenomenal to firm behavior? Is illegality part of the business of business? Or, can a well-designed legal regime induce a degree of corporate compliance sufficient to protect the integrity of the market and the state? Why, and under what conditions, will firms comply with the legal regimes governing corporate conduct, particularly when rules run contrary to parochial interests? These are among the most pressing questions in public governance. Unfortunately, in subjecting these questions to empirical analysis, and in redesigning legal regimes to enhance compliance, epistemological and methodological problems abound. First, a paucity of empirical studies testing general propositions regarding relationships between legal rules and firm behaviors hampers investigation. The few existing studies of firm compliance are insufficiently rigorous to offer deep insights. The field is a young, largely descriptive discipline that has treated the firm itself as the level of analysis; few testable hypotheses or nomothetic propositions are offered in the literature. As such, compliance with the legal regime governing public firms remains a largely idiopathic phenomenon. Second, compliance is not typically an “on-off switch,” and a particular issue-area within a broader regime may present no clear demarcation. Compliance may be a matter of interpretation, negotiation, and contestation between firms, regulators, and prosecutors. Therefore, any theory must operationalize compliance by specifying objective criteria for rendering a determination of the obligations created by complex and ambiguous sources of law. Third, firm misconduct occurs clandestinely, and firms have incentives to self-report better compliance records than they in fact earn. Investigators must, therefore, pre-establish protocols to guide interpretation of partial or unintentional compliance and give direction when reliable information is unavailable. Even more crucially, the study and regulation of firms per se as agents of compliance may be misguided. Firms are abstractions that exist only in the legal, and not the natural, sense, and, as such, utterly lack decisional capacity. Firms do not decide whether to comply with law; people, specifically officers who exercise decisional authority on their behalf, do. Any theory that would explain or predict firm compliance must account for the individual level of analysis. However, most corporate legal compliance research minimizes the salience of personality.7 Accordingly, Part II traces associations between personalities of CEOs and firm compliance with obligations arising under corporate law.8 Part III presents historical data to test heuristically the proffered theory and offer explanations and predictions of firm behaviors regarding GOVERNANCE FROM THE INSIDE OUT 79 (Robert Gandossy & Jeffrey Sonnenfeld eds. 2004). 7 Donald C. Langevoort, Monitoring: The Behavioral Economics of Corporate Compliance with Law, 17 COLUM. BUS. L. REV. 71, 73 (2002). 8 See infra Part II and accompanying notes 11–98. corporate legal compliance (CLC).9 Part IV, followed by a Conclusion, anticipates criticisms and suggests future research to build upon evidence that selection of CEOs on the basis of CLC propensities bears on firm survivability and prosperity, as well as on the orderly and legitimate function of the political economy.10 II. TOWARD A THEORY OF CLC A. Personality Theory Personality theory (PT) posits the individual as not merely causally significant but central to explanations and predictions of the “external” behavior of collective entities. Individuals are not prisoners of fell circumstances, but rather are capable of exerting positive influence on the world. Although variables drawn from other levels of analysis factor into explanations of the behavior of the sociolegal abstractions called firms, because individual corporate elites, and not firms, develop and implement the policies that shape the business universe, PT regards all firm behavior as subject to the influence of the complex interaction of psychological phenomena in the minds of the individuals responsible for those behaviors. Thus, the psychology of individual decisionmakers is the orienting focus for the study of CLC. Because the psychologies of decision-makers have decisional correlates, and because each individual is endowed with a unique personal psychology, PT explains how “who” the decision-maker is translates into decisions he or she has made and will make. Thus, a personality theorist models the causal relationship between relevant psychological variables, decisions, and outcomes, and accounts for variance across a range of decision-makers. 1. General Premises and Assumptions “Personality” refers to all aspects of an individual qua individual that influence his or her behavior. Within PT, each individual is an aggregate of a unique complex of constructs that drive a constant process of selection from among decisional alternatives. Choices are made to satisfy motivational, evaluative, or attitudinal dispositions and preferences and to shape the environment, and the decision-maker’s personality dictates the substance and process of these choices and yields behavioral and consequential effects.11 9 See infra Part III and accompanying notes 99–607. 10 See infra Part IV, V, and accompanying notes 608–611. 11 DAVID O. SEARS & ROBERT JERVIS, EDS. OXFORD HANDBOOK OF POLITICAL PSYCHOLOGY 21 (2003). Although PT regards decisions as deliberate and conscious, it emphatically does not presume rationality. In making decisions, individuals perform a series of complex tasks, including the search for information, the ordering of preferences, the development of alternatives, and the making of choices, and most are incapable of absorbing sufficient information and undertaking adequate evaluation to reach decisions that consistently maximize their welfare.12 The human mind is a limited instrument; under conditions of uncertainty and complexity, individuals simplify the decision-making process to avoid cognitive overload and reach closure.13 To lighten their burdens, decision-makers unconsciously resort to heuristics. Certain mechanisms—beliefs, images, values, motivations, attitudes, perceptions, and traits—represent the basic constituents of personality and the primary determinants of decisions. Identifying the relevant set of mechanisms, or constructs, operative in the decision-making context facilitates explanation and prediction of behavior. Establishing the process whereby these constructs determine decisions generates testable propositions. 2. Personality Constructs a. Beliefs “Beliefs” are internalized scripts about reality and about expected or preferred future outcomes that shape the manner in which incoming information is processed and interpreted. Individuals acquire a systematic tendency to see what they expect to see on the basis of the content of beliefs acquired early in life. Beliefs exert great influence upon the individual’s interpretation of events, and, thus, the individual’s identification of when there is a need or opportunity for making a choice, the individual’s choice and use of information, the individual’s definition of what constitutes realistic alternative courses of action, and what values are considered in a choice between alternatives. Beliefs “influence the actor’s definition of both the objectives and alternative courses of action available to his [or her] opponent, and the actor’s perception of the likely consequences of his [or her] own and his [or her] opponent’s actions.”14 Individuals are systematically more receptive to information consistent with their beliefs than to information that contradicts them and prone to process 12 YAACOV Y.I. VERTZBERGER. THE WORLD IN THEIR MINDS: INFORMATION, COGNITION, AND PERCEPTION 21 (1990). 13 ERIC SINGER & VALERIE HUDSON, EDS., POLITICAL PSYCHOLOGY AND FOREIGN POLICY 96 (1992). 14 DANIEL HERADSTVEIT, THE ARAB-ISRAELI CONFLICT: PSYCHOLOGICAL OBSTACLES TO PEACE 11–20 (1979). information selectively so as to support their belief systems, particularly under conditions of complexity, uncertainty, time pressure, and stress. Decisionmakers selectively ignore or fail to integrate information, building bias into their decision-making.15 When confronted with repeated inconsistencies between belief systems and the empirical world, individuals, to avoid cognitive dissonance, must either modify their beliefs or disconfirm the validity of inconsistent information. However, so powerful are beliefs in dictating perceptions that individuals tend to resist adaptation and structure their interactions with others consistent with the content of their beliefs regardless of contrary empirical evidence. b. Images “Images” are the accumulated understandings about him- or herself and the world an individual organizes into an affective and evaluative structure to simplify decision-making. Although images may reflect empirical reality, they are subjective: individuals “respon[d] not only to the ‘objective’ characteristics of a situation, but also to the meaning the situation has for [the]m.”16 Perhaps the most relevant image is the stereotype, defined as: [A] simplistic, unsophisticated belief about an individual or group that can be used to determine the proper way to think about individuals or groups and to enable decision[-]makers to fit a broad range of events into well-defined, narrow categories, allowing speed and economy of mental effort . . . and justifi[cation of] particular patterns of behavior and thinking.17 Stereotypes artificially rationalize decisions by attributing admirable qualities to allies and venality to opponents, thus introducing bias and increasing the likelihood of decisional failure.18 Patterns of behavior directed toward a given individual or entity are congruent with images held by the decision-maker about the individual or entity: a positive image corresponds with friendly, cooperative behavior, whereas a negative image corresponds with hostile, conflictual behavior.19 15 RICHARD E. NISBETT & LEE ROSS, HUMAN INFERENCE: STRATEGIES AND SHORTCOMINGS OF SOCIAL JUDGMENT (1980). 16 JOHN C. FARRELL & ASA P. SMITH, EDS., IMAGE AND REALITY IN WORLD POLITICS 16 (1967). 17 VERTZBERGER, supra note 12, at 127. 18 IRVING L. JANIS, GROUPTHINK 112 (1982). 19 WILLIAM O. CHITTICK, THE ANALYSIS OF FOREIGN POLICY OUTPUTS 52 (1975). “Values” are normative statements about behaviors, objects, and situations that are situated along a continuum, superimposed upon information, and used to evaluate information.20 “Attitudes,” defined as ideational formations having affective and cognitive dimensions that create a disposition for a particular pattern of behavior toward categories of objects and social situations, are intimately connected to images and beliefs.21 Individuals tend to discard information incongruent with their attitudes and search for information that supports attitudinal proclivities, particularly predispositions to feel or act positively or negatively toward peers.22 e. Traits “Traits” are the observable consistencies of style that form first perceptions, as well as the adjectives and adverbs of everyday language used to describe an individual. Traits such as energy level, self-confidence, organizational capacity, impulsivity, sociability, emotional expressiveness, intelligence, and sensitivity23 exert latent influence upon individual choices and behaviors.24 c. Values d. Attitudes f. Motives g. Summary “Motives” are latent dispositions that direct decision-makers to define situations, make judgments, mobilize resources, and selectively pursue ends.25 Beliefs, images, values, attitudes, traits, motives, and other attributes create mechanisms in the mind of an individual faced with uncertainty and time constraints that filter, order, simplify, and explain the decisional universe while facilitating identification, evaluation, and selection of alternatives. For simplicity, the term “personality construct” references each of these elements of personality individually and collectively. 3. Measuring Personality Problems with data access hamper development and testing of PT models of decision-making. An attempt to specify the manner in which personality translates into CLC decisions requires opening the black box of the firm to ascertain precisely what senior decision-makers think, say, and do during decision-making, yet this is possible only post-hoc. Moreover, firms tend to zealously guard corporate secrets—particularly when facing legal exposure— and what data does leak into media, public trials, memoirs, biographies, and other secondary sources tends to be less than completely reliable.26 Similarly, assessments of the link between personality and CLC decision-making that rely on literature reviews, insider interviews, and biographies are subject to validity problems due to temporal and spatial distance from the subject, deception, faulty interview designs, and human fallibility. For these reasons, available data may not perfectly reveal the true beliefs, images, values, traits, or motives of decision-makers, and may thus fail to offer an unimpeachable accounting of their personalities.27 Establishing the role of personality in decision-making requires a measurement protocol. Direct measurement is possible through interviews, observation, and psychometric testing, but otherwise personality must be inferred from behavior. The psychobiographical approach gathers all available sources, including letters, speeches, interviews, newspapers, autobiographies, anecdotal evidence, and observation, to generate an explicit, valid, and reliable assessment of personality.28 Psychobiographers engage in an iterative process of data collection, aggregation, and testing, comparing sources to judge reliability and validity.29 Psychobiographical data are used to “score” decision-makers on personality constructs hypothesized to give rise to variance in the decisions under analysis, with the ultimate objective the explanation of how particular combinations of personality constructs, or “personality profiles,” cause specific decisions and consequent outcomes. 26 SINGER & HUDSON, supra note 13, at 220. 27 LAWRENCE FALKNOWSKI, PSYCHOLOGICAL MODELS IN INTERNATIONAL POLITICS 8 (1979). 28 Dean K. Simonton, Presidential Style: Personality, Biography, and Performance, 55 J. PERS. & SOC. PSYCHOL. 928 (1988). 29 JEANNE N. KNUTSON, ED. HANDBOOK OF POLITICAL PSYCHOLOGY 307–18 (1973). 4. Conditionality and Contingency: Other Levels of Analysis The relationship between personality and firm behavior is one of contingency: assertions of causality are couched as true only in some cases and under certain conditions, and caution must be exercised in generalizing from their findings. Individuals are constrained and influenced by political, economic, and social realities, as well as by the culture of relevant constituencies and by public opinion. No firm, ergo no decision-maker, is omnipotent. Still, the influence of exogenous constraints upon CLC decisionmaking is bounded. The role occupied by the individual is relevant to assessing the weight attributable to personality. The closer the individual is to the apex of the corporate hierarchy the more he or she is invested with the decisional autonomy in selecting goals, committing resources, and ordering firm actions. The most senior decision-makers (SDs)—CEOs, CFOs, and CLOs—are invested with the greatest quantum of power relative to other employees, and, as decisional freedom increases, exogenous constraints diminish. Furthermore, situational context is crucial. During situations of ambiguity, instability, and uncertainty, PT accords greater causal weight to personality than to other variables, and an absence of precedent, increased time constraints, and emotional stress further diminish the theoretical significance of other factors.30 Responsibility follows power, and SDs tend to rely less upon external guidance when their firm is subject to threat or opportunity. Because the role of firm constituencies and the influence of public opinion contracts during conditions of ambiguity and uncertainty, and because determinations of whether to comply with ambiguous laws that hamper the immediate pursuit of material self-interest and specify serious civil and criminal sanctions for their violation implicate the highest of stakes and trigger great stress, the salience of exogenous constraints is at a nadir and the role of SD personality in the chain of causation resulting in firm behaviors is at a zenith in the issue-area of CLC. Although PT does not advance the naïve view of decisions as the mere projection of personalities, neither does it accept the simplistic view that personalities have no effect. While the relationship between personality and decision-making is contingent and conditional, it is positive, and firm behaviors, including CLC, reflect the personality of the SDs at the helm. B. A Theory of CLC 1. Introduction Personality theories treat empirical behaviors as the explanandum—the things to be explained—and one or more personality constructs as the explanans—the explanatory variables. In other words, firm behaviors are dependent variables (DVs) that are the end result of a chain of causation running through the personality of the individuals who set the course the firm will follow, and the personality constructs that constitute this unique personality are independent variables (IVs). A theoretical model that allows for psychobiographical measurement of policy-relevant personality constructs may enable enriched explanations of CLC decisions while retaining parsimony. In developing this model, efforts will be made to enumerate and define the personality constructs operant in the personalities of CEOs responsible, via CLC decisions, for particular outcomes; next, a set of preliminary hypotheses based upon associative linkages between personality constructs and outcomes shall be offered and heuristically tested. 2. Independent Variables: Personality Constructs The proposed pre-theory of CLC hypothesizes that the presence or absence of four constructs in the personalities of CEOs are responsible for firm compliance with or violation of the legal regimes governing corporate behavior; these personality constructs, which serve as IVs, are “militarism,” “anomism,” “hostility,” and “adventurism.” a. Militarism “Militarism” is a global construct that taps a set of beliefs, values, images, and attitudes. The militarist is more likely to consider forceful or anti-social alternatives than his or her non-militarist counterpart, more prone to escalate conflictual situations, and more likely to lead the firm to violate the law in pursuit of his or her objectives.31 Nationalism and a favorable attitude toward power have been identified as most predictive of the level of conflict associated with decision-makers; nonetheless, all ten sub-constructs that typify the militarist, specifically nationalism, a favorable attitude toward power, aggression, authoritarianism, competitiveness, dogmatism, introversion, isolationism, ambitiousness, and low self-esteem, are incorporated in the theoretical model. The ideal-typic32 militarist scores high, indicating the presence of the sub-construct in his or her personality profile to an extent significantly greater than the average person, on each sub-construct. “Militarism” does not imply a decision-maker who embodies these traits is enamored of or has served in the military, nor does it necessarily imply he or she believes imposing military solutions on problems is always desirable; rather, it is an apt term for the global personality construct that captures the aforementioned dimensions of personality. i. Sub-constructs of Militarism “Nationalism” is a belief that one’s nation is superior to other nations by virtue of its culture, tradition, race, ethnic composition, philosophy of government, or other characteristics,33 as well as the motivation to “develop, protect, maintain, or refine” this culture, tradition, race, or philosophy.34 Nationalists are more prone to defend fellow nationals in word and deed and more likely than non-nationalists to serve in the armed forces.35 On the other hand, nationalists are less able to make subtle distinctions and gradations.36 The behavioral outputs of nationalists tend to be more conflictual than those associated with their non-nationalist counterparts, and these effects are heightened by cultural dissimilarities between the nationalist and the target of the behavior. “Favorable attitude toward power” is a composite sub-construct, which refers to beliefs regarding the desirability and utility of possessing and employing force or coercion in the pursuit of objectives. “Throughout history, [decision-makers] who attain legendary status often tend to be those who have conquered other nations, won major wars, forcibly transformed their societies, and imposed their own beliefs on their subjects[;]”37 decision-makers seeking this status tend to have positive attitudes toward the military, nuclear weapons, war, and control over others—the instrumentalities that achieve status.38 The decision-maker with a favorable attitude toward power believes power, rather than reason, is essential to preserving order. “Aggression” is the trait that directs an individual to engage in selfassertive, self-protective, domineering, hostile, and/or violent interactions with others.39 “Authoritarianism” is the belief that unquestioning obedience to authority is superior to freedom of judgment and that credibility of information is a function of the authority of the source, rather than its factual reliability.40 Authoritarians rigidly adhere to conventional values, condemn violators of social tradition as threats, and preoccupy themselves with hierarchies and social cohesion.41 “Competitiveness” is the drive to struggle against others for satisfaction of wants and needs.42 “Dogmatism” is the degree to which an individual cannot identify or use conceptual linkages, tolerate and assimilate contrary beliefs, analyze contingencies, adapt to ambiguity, generate alternatives, perceive shades of grey, and think abstractly.43 “Introversion” describes an attitude and trait in which an individual directs attention inward to his or her own thoughts and experiences rather than toward objects or people.44 “Isolationism” is the negative value attached to establishing and maintaining emotional relationships with others. Isolationists lack a predisposition to seek approval and to limit the type or degree of conflict, and they tend to be overly self-reliant.45 “Ambitiousness” is the value attached to personal accomplishment, and ambitious individuals are predisposed to strive for success in tasks involving leadership and the demonstration of intelligence.46 “Low self-esteem” is the absence of a belief in one’s own capability, 38 DENNIS J.D. SANDOLE, CAPTURING THE COMPLEXITY OF CONFLICT: DEALING WITH VIOLENT ETHNIC CONFLICTS OF THE POST-COLD WAR ERA 24 (1999). 39 MAGNUSSON, supra note 24, at 165. 40 VERTZBERGER, supra note 12, at 172. 41 See T. ADORNO, E. FRANKEL-BRUNSWICK, D.J. LEVINSON & R. NEVITT SANFORD, THE AUTHORITARIAN PERSONALITY (1950). 42 Joseph Badaracco, Jr., We Don’t Need Another Hero, Harv. Bus. Rev., Sept. 1, 2001, at 1–12. 43 MILTON ROKEACH, THE OPEN AND CLOSED MIND 62 (1960). 44 VERTZBERGER, supra note 12, at 173. 45 DAVID DOTLICH & PETER CAIRO, WHY CEOS FAIL: THE 11 BEHAVIORS THAT CAN DERAIL YOUR CLIMB TO THE TOP AND HOW TO MANAGE THEM 64–65 (2003). 46 MAGNUSSON, supra note 24, at 412. worth, and entitlement to respect; individuals with low self-esteem are not selfconfident, patient, or likely to perceive themselves as competent and wellregarded by peers,47 but are more prone to violent behavior than those with high self-esteem and more likely to suppress constructive conflict.48 ii. Summary and Operationalization: Militarism The ideal-typic militarist is a nationalist with prior military service who views the use of power favorably, is an aggressive competitor and keenly ambitious, and is authoritarian and dogmatic yet introverted, isolated, and beset with low self-esteem. While the pure ideal-typic militarist may exist only in theory, militarists score high, indicating the presence of the sub-construct in his or her personality profile to an extent significantly greater than the average person, on a majority of the sub-constructs. b. Anomism “Anomism” consists of five sub-constructs—disregard for law, disregard for legal authorities, amoralism, ignorance of law, and ignorance of corporate law—that tap a set of intercorrelated beliefs, values, images, and attitudes regarding the rule of law. The anomist has little regard for law or legal authorities, lacks moral or ethical qualms about violating law, and knows little of the substance of law generally and less about corporate law. In brief, the anomist is a serial and unrepentant lawbreaker who holds dear no superordinate moral principles. The ideal-typic anomist scores high on each sub-construct. i. Disregard for Law Although “[e]veryone breaks the law sometimes, and some people break it often[,]”49 for many individuals law is an object of reverence and obedience a quasi-religious duty.50 Many, and perhaps most, people quite simply believe law must be obeyed for the simple reason that it is law.51 The anomist, in ii. Disregard for Legal Authorities contrast, accords no independent normative value to legal obligations and regards legal obedience in purely instrumental terms: if obeying the law suits his self-interest, he or she does so, but, if obedience thwarts the pursuit of his or her ends, law is but another objective impediment that must be overcome or negotiated away.52 Regard and respect for legal authority is widely diffused across demographic, cultural, and geographic domains. Most people accord legal authorities, including the police and the judiciary, the presumption of integrity, competence, and legitimacy, and as a consequence cooperate and comply with them in their official capacities.53 By contrast, anomists treat legal authorities as inherently unworthy of respect or obedience and as constraints to be factored into calculations of how best to pursue self-interest. iii. Amoralism “Amoralism” refers to an absence of absolutism in the evaluation and judgment of character, conduct, ethics, and values. Most people “d[o] not simply act in pursuit of gains[;] rather, their own personal sense of right and wrong influence[s] their behavior. . . [and] [t]hey . . . engage in the behavior that they think is morally right.”54 Such people consider non-compliance morally unjustifiable, and many consider the moral evil occasioned by noncompliance to be greater than the evil of obeying a law with which they disagree.55 The amoralist, however, accords no moral virtue to compliance and is agnostic, and thus amoral, regarding right and wrong. Moral judgments are less consequential to the anomist than the perceived certainty or threat of punishment. iv. Ignorance of Law “Ignorance of law” is the absence of formal legal education—not the absence of legal knowledge. Those with legal training may be more likely to regard legal obligations as binding. Although legal training “does not assure 52 ABRAM CHAYES & ANTONIOA CHAYERS, THE NEW SOVEREIGNTY: COMPLIANCE WITH INTERNATIONAL REGULATORY AGREEMENTS 117 (1995). 53 TYLER, ET. AL., supra note 45, at 38–39, 45. 54 Id. at 116. 55 IRVING JANIS & LEO MANN, DECISION MAKING: A PSYCHOLOGICAL ANALYSIS OF CONFLICT, CHOICE, AND COMMITMENT 28 (1977). WP25 WP26 WP27 WP28 The more adventuristic the CEO, the more likely his/her firm will be to violate employee rights. The more adventuristic the CEO, the more likely s/he will be subpoenaed by Congress. The more adventuristic the CEO, the more likely s/he and his/her firm will incur legal penalties. The more adventuristic the CEO, the more likely his/her firm will be to suffer legal death. 7/10 7/10 8/10 7/10 d. Analysis of Associative Relationships i. Militarism and CLC WP 1 confirms the intuition that a CEO who is fixed upon achieving wealth, power, and status to the detriment of other ends, including the discharge of responsibilities to stakeholders, will violate financial regulations if rules stand in the way. Similarly, as WP 3 suggests, it stands to reason that such a person so motivated will run roughshod over the legally-protected rights and interests of employees. Moreover, as violations mount, detection is inevitable in the long run, and WP 5 predicts that along the path the odds the illegal conduct of firms, or at least some aspects of it, will “leak” into the community and earn them and their CEOs reputations as scofflaws increases in direct proportion to the frequency of their lawbreaking which, in turn, is a function of CEO militarism. Finally, it stands to reason, as WP 6 suggests, firms with militaristic CEOs will be more likely to commit legal violations that result in legal penalties. In contrast, it is counterintuitive, as WPs 2 and 4 suggest, that militaristic CEOs are better environmental defenders than their non-militaristic peers and less likely to manipulate the market. Both findings are likely an artifact of the small number of cases, and the former is likely the result of the fact that few, if any, include the enterprises—mining, manufacturing, etc.—against which most of the existing environmental legal regime is directed. ii. Anomism and CLC Anomistic CEOs—ignorant and even disdainful of law and legal authorities and bereft of an internal moral code—will instinctively regard legal and moral restrictions on their conduct in purely instrumental terms. As WPs 7, 8, 9, and 12 suggest, little, if any, independent weight will be accorded to financial and securities laws, customary expectations regarding executive compensation, or the rights of employees in their CLC decision-making, and behaviors will be guided largely, or even solely, by other considerations. WP 14 indicates anomistic CEOs assume greater legal risk and, therefore, incur greater legal exposure, to include the increased likelihood of prosecution, and, with prosecution, conviction. Finally, it is consistent with the general description of anomism that, as WP 15 anticipates, the anomistic CEO, who knows and cares little about the legal regime he or she is accused of violating and has never felt impressed by any sense of legal obligation, will deny any knowledge of or responsibility for his or her wrongdoing and seek to attribute any such responsibility to other parties. Although there is a human tendency to deny responsibility for one’s mistakes, this tendency is strongest in the anomistic CEO, who does not believe in the law, and, if in fact the law exists, is sure he or she is above it. WPs10 and 11, however, are counterintuitive. An anomistic CEO is precisely the sort expected to engage in buying political influence and outright bribery, notwithstanding any legal prohibition. Still, at least insofar as WP 10 is concerned, only a small number of cases are available for study and the practice may largely be limited to international firms doing business overseas. Similarly, the finding in WP 13—an anomistic CEO is less likely to engage a firm in violation of environmental law—is difficult to explain and may be driven in part by the limited number of cases and the lack of representation in the sample by extractive and manufacturing firms that engage in operations with potential environmental impacts. iii. Hostility and CLC It stands to reason, as WPs 16 and 17 postulate, that self-absorbed, delusional, amoral CEOs who distrust and dislike humanity would treat “lesser” people as tools for grabbing wealth and power in contravention of financial and securities laws. Hostility may warp CEO judgments. It also should follow, as WP 21 anticipates, that such selfish and hostile personalities subordinate firm interests to their own in ultimately futile attempts to stave off detection and punishment. And, as WP 22 indicates, when confronted with evidence of their wrongdoing, hostile CEOs are psychologically predisposed to preserve delusions of perfection and nobility, deny wrongdoing, and blame the “little people” who have failed them. The finding in WP 18 is likely an artifact of too few cases. Only five firms—Enron, WorldCom, AIG, Halliburton, and Countrywide—possessed the kind of market clout that could disturb the efficient operation of markets, and the majority of these firms did wield this clout. Had more firms with market power and hostile CEOs been available for study, intuition suggests the direction of this relationship would be reversed. WP 19 is also counterintuitive; we would expect that the more hostile a CEO is the more likely he or she would be to look upon bribery as nothing more than necessary business expense paid to achieve gains, particularly as against those unwilling to pay. It may be that hostility is no absolute bar to the exercise of prudent discretion, or that parties seeking bribes are more cautious in their dealings with CEOs they recognize as hostile and tend to refrain from conduct in which they suspect their would-be coconspirators would later implicate them. Because the analysis of the ten cases of corporate scandal yield only three instances of bribery, it is premature to claim much strength for the associative relationship implied by WP 19. The same must be said for WP 20; the ten cases reveal only a single attempt to violate environmental laws, and the prediction that the more hostile the CEO the less likely his or her firm will violate environmental standards may be the product of insufficient data. iv. Adventurism and CLC WP 23 states impulsive, optimistic gamblers who repose great faith in their capacity to control events and absorb stress are, as CEOs, compelled to undertake business strategies that afford the prospect of significant benefits— specifically, violating securities regulations—while presenting significant risks in the form of financial and legal consequences to themselves, their firms, their shareholders, and their communities. As WPs 24 and 25 predict, seeking inflated compensation and abusing subordinate employees for selfish motives are behaviors associated with the adventuristic CEO because the payoff to the CEO is great and the potential penalties—the loss of face and the loss of human capital to the firm—seem small in comparison. WP 26, which postulates that the more adventuristic the CEO the more likely he or she will be subpoenaed by Congress, illustrates that, although risk and optimism are necessary parts of a business strategy and although some of the greatest human triumphs have been attained by the assumption of great amounts of risk—aviation and the discovery of drugs for cancer are but two—risk can also lead to business failure, and to the sort of financial and accounting shenanigans designed to shield failure from investors. WP 27 and WP 28 illustrate a strong association between adventurism and legal penalties, as well as the legal death of the adventurist’s firm. Apparently, not only Congress but also shareholders eager to recoup losses and prosecutors motivated by visions of higher office take a dim view of CEO adventurism. e. Outcome Maximizing Associations and Combinations Although no CLC outcome has a prime implicant, several are associated with personality profiles that share at least one personality construct score across at least 70% of associated profiles. WP 1, “The more militaristic a CEO, the more likely his/her firm will be to violate financial regulations,” is supported by seven of ten, or 70%, of cases, while six of seven, or 86%, of personality profiles associated with the presence of the outcome “violate financial regulations” contain the personality construct “A,” “militaristic,” and, thus, reinforce WP 1. Nineteen Outcome Maximizing Associations (OMAs) meet or exceed the 70% confidence level on both measures: WPs 1, 3, 5, 6, 7, 8, 9, 12, 14, 15, 16, 17, 22, 23, 24, 25, 26, 27, and 28. An “Outcome Maximizing Combination” (OMC) represents that construct or aggregation of constructs that yields the greatest probability, relative to all others, that the corresponding outcome will occur. Each construct that generates an OMA for an outcome is included in the OMC for that outcome. Constructs that do not meet this threshold are excluded from OMCs, and it is assumed that these constructs have no greater influence than chance on the associated outcomes. For example, for the outcome “violate securities regulation,” three WPs—WP 9, “The more anomistic the CEO the more likely his/her firm will be to violate securities regulations,” WP 19, “The more hostile the CEO the more likely his/her firm will be to violate securities regulations,” and WP 27, “The more adventuristic the CEO the more likely his/her firm will be to violate securities regulations”—are OMAs. Therefore, “anomism,” “hostility,” and “adventurism,” indicated by the score BCD, form the OMC for “violate securities regulations. However, PH 2, “The more militaristic the CEO the more likely his/her firm will be to violate securities regulations,” was supported by 60% of cases and, thus, did not meet the 70% threshold to be included as a WP and, thus, is excluded as an OMA. Consequently, neither the presence nor absence of militarism is part of the OMC for “violate securities regulations,” and whether the CEO is militaristic or not has no greater influence than chance on the outcome “violate securities regulations. Table IV illustrates OMCs for all CLC outcomes: Bribery Political Influence AC BCD BD None None Labor Law Enviro Resist Enforce Bad Reputation Restate Earnings Subpoena Legal Penalties Legal Death Deny & Blame ABD None A C ABD ABCD D D BC Each construct is associated with six OMCs, a finding that suggests all constructs are equally associated with CLC outcomes. Yet, as further analysis reveals, hostility, and to a lesser extent adventurism, may be the “master” CLC personality constructs that harness the greatest explanatory and predictive power. If so, then the capacity to determine the presence or absence of hostility and adventurism is a potent tool in CEO selection and retention. That anomism may yield less predictive power is counterintuitive inasmuch as one might expect this construct, which most closely taps attitudes, beliefs, and values about law and legal institutions, to offer greater insight into CEO behaviors regarding CLC. The fact that beliefs, attitudes, and values held by a CEO regarding law may be less salient to explaining and predicting the compliance of his firm than his hostility or adventurism is remarkable. f. Probabilistic Statements of Association A “Probabilistic Statement of Association” (PSA) is a synthetic statement of the associative strength between a personality construct and a CLC outcome across a minimum of 70% of the ten historical cases in hypothetical analysis, as well as across a minimum of 70% of cases in which the outcome is actually expressed. A PSA expresses the strength of the associative relationship in terms of the probability that a given CLC outcome will occur given information about the construct or profile of the CEO who makes CLC decisions. PSAs do not imply the absolute truth of the associative relationship, nor do they identify the microprocesses that “produce” outcomes. Nonetheless nineteen PSAs, illustrated in Table V, help extend the reach of data analysis: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 6 of 7 outcome occurrences (86%) for an average probability of .78. A militaristic CEO associates with violation of employee rights in 8 of 10 cases (100%) and 6 of 6 outcome occurrences (100%) for an average probability of .90. A militaristic CEO associates with a bad reputation in 7 of 10 cases (70%) and 5 of 5 outcome occurrences (100%) for an average probability of .85. A militaristic CEO associates with legal penalties in 7 of 10 cases (70%) and 6 of 7 outcome occurrences (86%) for an average probability of .78. An anomistic CEO associates with violation of financial regulations in 7 of 10 cases (70%) and 6 of 7 outcome occurrences (86%) for an average probability of .78. An anomistic CEO associates with violation of securities regulations in 8 of 10 cases (80%) and 7 of 8 outcome occurrences (88%) for an average probability of .84. An anomistic CEO associates with inflated executive compensation in 8 of 10 cases (80%) and 6 of 6 outcome occurrences (100%) for an average probability of .90. An anomistic CEO associates with violation of employee rights in 8 of 10 cases (80%) and 6 of 6 outcome occurrences (100%) for an average probability of .90. An anomistic CEO associates with legal penalties in 7 of 10 cases (70%) and 6 of 7 outcome occurrences (86%) for an average probability of .78. An anomistic CEO associates with denial of wrongdoing in 7 of 10 cases (70%) and 6 of 7 outcome occurrences (86%) for an average probability of .78. A hostile CEO associates with violations of financial regulations in 7 of 10 cases (70%) and 7 of 7 outcome occurrences (100%) for an average probability of .85. A hostile CEO associates with violations of securities regulations in 7 of 10 cases (70%) and 8 of 8 outcome occurrences (100%) for an average probability of .85. A hostile CEO associates with denial of wrongdoing and attribution of blame in 7 of 10 cases (70%) and 7 of 7 outcome occurrences (100%) for an average probability of .85. An adventuristic CEO associates with securities violations in 9 of 10 cases (90%) and 7 of 8 outcome occurrences (88%) for an average probability of .89. An adventuristic CEO associates with inflated executive compensation in 7 of 10 cases (70%) and 5 of 6 outcome occurrences (83%) for an average probability of .77. An adventuristic CEO associates with violation of employee rights in 7 of 10 cases (70%) and 5 of 6 outcome occurrences (83%) for an average probability of .77. An adventuristic CEO associates with a congressional subpoena in 7 of 10 cases (70%) and 5 of 6 outcome occurrences (83%) for an average probability of .77. An adventuristic CEO associates with legal penalties in 8 of 10 cases (80%) and 6 of 7 outcome occurrences (86%) for an average probability of .83. An adventuristic CEO associates with legal death in 7 of 10 cases (70%) and 4 of 4 outcome occurrences (100%) for an average probability of .85. PSAs offer explanatory and predictive probabilities for eleven of fifteen DVs/outcomes; no PSA can be deduced on the basis of existing data for four CLC outcomes at or above the 70% threshold. For example, PSAs 4, 9, and 18, taken together, suggest the probability that legal penalties were or will be imposed upon a firm led into scandal by a militaristic, anomistic, and adventuristic CEO is 80%—the average of 78%, 78%, and 83%. Put differently, the probability that a militaristic, anomistic, and adventuristic CEO has or will be more likely to make business decisions that result in legal penalties than will a non-militaristic, non-anomistic, and non-adventuristic CEO is 80%. The corollary also holds: the probability that legal penalties have been or will be imposed upon a firm led by a non-militaristic, non-anomistic, and nonadventuristic CEO is 20%. C. Combined Theoretical Model Coefficients of Associative Relationships (CAR) relax the rigor in establishing association between personality constructs and CLC outcomes and are measured by calculating the average of (1) the percentage of cases in hypothetical analysis supporting a particular associative relationship between a construct and a particular outcome and (2) the percentage of QCA outcome occurrences in which the associative relationship between the construct and outcome is expressed. For example, for militarism and “violate financial regulations,” the associative relationship is supported in 70% of cases and the militarism sub-construct is present in 6 of 7, or 86%, of occurrences of “violate financial regulations.” Thus, the CAR for the relationship between militarism and “violate financial regulations” is .78—the average of .70 and .86. In Figure 1, arrows indicate associative relationships between constructs and CLC outcomes. The strengths of associative relationships are indicated by labeling each arrow with a CAR ranging from -1.00 to -.50 and .50 to 1.00. A relationship of perfect positive association is accorded a CAR of 1.00; a relationship of perfect negative association is accorded a CAR of -1.00. A CAR of .5 or -.5 signifies the equivalent of chance. This measurement is analogous to the correlation coefficients used in regression analysis; however, true measurement of correlation is not feasible given the small “n” of cases, and, thus, relationships of association are employed to the same end. Where an arrow connects a construct to a CLC outcome labeled with a positive CAR, the presence of the personality construct associates with the CLC outcome. The obverse of this stated relationship is also true. For an arrow labeled with a negative CAR the absence of the personality construct associates with the CLC outcome to which it is connected. Again, the obverse of this relationship is also true. In the Model, only those CARs with coefficients greater than or equal to .65 are represented: MILITARISM A ANOMISM B HOSTILITY C ADVENTURISM MARKET B .75 D.90 BRIBERY A .75 POLITICAL INFLUENCE A .65 B .65 C .80 LABOR LAW A .90 B .9 C.80 D .77 ENVIRONMENTAL LAW A .65 B .75 D .7 RESIST ENFORCEMENT A .75B .75 C .86 BAD REPUTATION A.75 B .65 C .65 RESTATE EARNINGS A .72 C .80 CONGRESSIONAL SUBPOENA A .77 B .77 C .85D .77 FINANCIAL VIOLATION A.78 B.78 C.85 D.66 SECURITIES VIOLATION A.68 B.89 C.90 D.89 INFLATE COMPENSATION A .77 B .85 C .80 D .77 DENY& BLAME B.78 C .85 D .66 LEGAL DEATH B .85 C .70 D .85 LEGAL PENALTY A .78 B .78 C .85 D .83 D. General Observations and Caveats Perfect explanation and prediction of human decisions made in complex and dynamic situations characterized by uncertainty and stress transcend the current state of science, as do attempts to predict exactly when, where, and how future corporate scandals will erupt. It is important to stress the limited and conditional nature of the causal significance of personality. Nevertheless, heuristic testing of the CLC pretheory has generated several associative relationships between CEO personality constructs and CLC outcomes. These relationships, presented in narrative format, are building blocks upon which to continue development and testing of the theory. 1. “Ideal-Typic” CEOs and Associated CLC Outcomes a. ABCD The CEO who is a militarist and is anomistic, hostile, and adventuristic— ABCD—is an authoritarian, even imperial, leader and an aggressive competitor with prior military service and low self-esteem who will view the use of power favorably both within the firm to establish hierarchies and in its business strategy to defeat rivals, and will prefer to make decisions in isolation. He or she will have little regard for law or legal authorities, will lack moral or ethical qualms about violating obligations regarding finance or securities regimes, and will know little of the substance of law generally and even less about corporate law. He or she will not trust others and will regard stakeholders—employees, investors, business partners—in solely instrumental terms: their worth to him/her will be measured simply by whether they contribute to his or her grand visions of wealth, power, and status, and failing any value he or she will express a generalized animus toward them, particularly if they are of different social groups than him or her. He or she will be an optimistic gambler whose belief that he or she can assert his or her will upon events and bend others to his or her aims will impel him or her to take risks and cut corners, and he or she will resolve the tremendous anxiety and stress that accompanies this risky behavior by trusting blindly and, in effect, rolling the dice that neither he or she nor his or her firm will be caught when committing CLC violations. The ABCD CEO is more likely than a CEO with any other personality profile to preside over a firm that engages in fraudulent accounting, misrepresentation of the firm’s financial condition, insider trading, and other securities violations. This CEO creates a culture of lavish compensation packages for executives that are indefensible by reference to the marketplace while disregarding laws that protect other employees against discrimination, fair employment practices, violations of pension and retirement benefits, and reprisals for whistleblowing. Prior to discovery of its substantial and systematic violations of law, the firm led by this CEO will earn a bad reputation with employees, investors, lenders, customers, vendors, local communities, and regulators for unethical and unlawful practices. These external stakeholders may intuitively recognize and naturally resent the ABDC CEO’s decision to discount their influence and interests; however, any anxiety and stress that attend the prospects of developing a bad reputation are more than offset by the ABCD CEO’s optimistic hope that the profit from such a strategy more than compensates the firm for the risk entailed in “going it alone.” Moreover, when he or she fails to overcome risks that a less adventuristic CEO would not have assumed and the firm stumbles publicly, Congress may well come calling. However, this CEO will feel no independent compliance pull. His or her lack of trust in the political and legal system, coupled with the belief Congress is “the enemy,” will place the CEO in an adversarial relationship, and he or she will likely refuse to testify on Fifth Amendment grounds. Congressional committees, frustrated by the lack of voluntary compliance and by the inability to attribute business failures to the assumption of understandable risk rather than to illegality, will be compelled to subpoena him or her. This CEO’s gamble that neither he or she nor his or her firm will be detected, or if detected, prosecuted, or if prosecuted, convicted, will often be a losing bet, for this personality profile is most closely associated with the imposition of civil and criminal legal penalties. Precisely how unbridled, aggressive ambition coupled with a lack of legal or ethical foundation and a hostile, instrumental, risk-hungry approach translates into these CLC violations, and the consequences that follow, is the stuff of future research. Still, the preceding description readily evokes Jeffrey Skilling, Sam Waksal, Albert Dunlap, Dick Cheney, and Bernard Madoff—ABCD CEOs. b. (A/a)BCD The (A/a)BCD CEO may view reason and persuasion, rather than power, as appropriate methods for making and implementing decisions, and may prefer to build coalitions and affiliations. His or her successes may be shared successes. However, he or she will have little regard for law or legal authorities, will lack moral or ethical qualms about violating legal obligations, and will know little of the substance of law generally and even less about corporate law. He or she will not trust others and will regard rivals and stakeholders— employees, investors, business partners—in instrumental terms: their worth to him or her will be measured simply by whether they contribute to his or her grand visions of wealth, power, and status, and failing any value he or she will express a generalized animus toward them, particularly if they are of different social groups than him or her. The (A/a)BCD CEO’s wildly optimistic belief that he or she can assert his or her will upon events to gain advantage over competitors will impel him or her to take great risks, and he or she will resolve accompanying anxiety and stress by trusting blindly and gambling that neither he or she nor his or her firm will be sanctioned by regulators. The (A/a)BCD CEO is the most likely personality profile to direct a firm to violate antitrust laws, fix prices or production levels, commit industrial espionage, and manipulate the market. He or she is also most likely to preside over the bankruptcy or liquidation of his or her firm as a result of having engaged in practices made illegal under corporate law. Ignorance, it seems, may spell not bliss but actually danger in a CEO, whose gambles that he or she can conspire to restrain fair trade, that his or her firm will not post losses than cannot be covered by earnings, and that the firm will remain liquid in the face of demanding creditors and unwilling debtors, will prove fatal. When the firm and its leaders are subjected to legal penalties, the (A/a)BCD CEO will deny wrongdoing, withhold apologies or remorse, and blame others. As a superior creature who regards the “little people” he or she employs or who hold the firm’s shares or live as neighbors as mere objects meant to serve ends, and as someone who does not feel any compliance pull whatsoever, the (A/a)BCD CEO feels no empathy for those who suffer his or her decisions and must displace the blame upon a lesser person better suited to bear it. Although denying blame for our mistakes and casting it upon others may be a function of simply being human—few of us are able to openly admit that we are imperfect and that who we would like to be and who we are expected to be in social life are not always achieved—and while denying wrongdoing may be a rational defense that all but the clinically insane or the most honest offer to minimize attendant political and legal costs, the (A/a)BCD CEO is least likely of all personality profiles to accept any responsibility. The present study cannot conclude militarism has a significant associative relationship with the outcome “manipulate the market.” However, three CEOs led their firms to commit this CLC violation, and two—Jeffrey Skilling and Dick Cheney—are militarists. Moreover, four firms suffered legal death: Enron, WorldCom, Sunbeam, and Bernard L. Madoff Investment Securities. Each of their CEOs, save for Bernie Ebbers, is a militarist. Furthermore, two other firms led by CEOs with the personality profile (A/a)BCD, namely ImClone and Tyco, were able to escape legal death only by the astute planning of a merger partner in the case of the former and by a rapid and sound reorganization plan instituted by a new executive team and board in the case of the latter. c. A(B/b)C(D/d) The A(B/b)C(D/d) CEO is an authoritarian and nationalistic leader with prior military service who has low self-esteem and is isolated from others but has fierce ambition and competitive drive and regards the use of power as an appropriate means of achieving goals. He or she will not trust others and will regard stakeholders—employees, investors, business partners—in solely instrumental terms: their worth to him or her will be measured simply by whether they contribute to his or her grand visions of wealth, power, and status, and failing any value he or she will express a generalized animus toward them, particularly if they are of different social groups than him or her. The A(B/b)C(D/d) CEO is more likely than those with other personality profiles to direct a firm to corrupt business practices by accepting or offering cash, services, or gifts to influence business decisions. This CEO’s drive for power, control, and the defeat of his or her rivals, coupled with a disregard for law and legal authorities and moral sources of rules, will convince him or her that corruption is a part of the human condition and that it is legitimate to gain advantage over competitors by unlawful means, and he or she is unlikely to experience sufficient anxiety or stress to dissuade him or her from doing so. Neither the anomism nor adventurism constructs demonstrated associations of sufficient strength for inclusion in the ideal-typic personality profile for bribery. d. ABC(D/d) The ABC(D/d) CEO is an authoritarian, nationalistic leader with prior military service who has low self-esteem and is isolated but has fierce ambition and competitive drive and regards power as an appropriate method of reaching decisions within the firm. He or she will be a self-absorbed, amoral individual who makes decisions in isolation and will not seek to build affiliations with others unless they serve his or her goal of achieving and protecting wealth, power, and status. He or she will not trust others and will regard stakeholders— employees, investors, and even politicians—in solely instrumental terms: their worth to him or her will be measured simply by whether they advance his or her grand visions of wealth, power, and status, and if they do not he or she will bear them an animus. The ABC(D/d) CEO is more likely than CEOs with other personality profiles to allow or require corporate or employee funds, facilities, or services to be used to support political candidates or parties in violation of law. Despite his or her hostility, in the case of powerful politicians who grant patronage in the form of desirable laws, generous political oversight, and prosecutorial discretion, he or she is willing to pay for their services, and this reflects the perceived utility of the political influence purchased and the benefits accorded to his or her pursuit of wealth, power, and status, rather than the intrinsic value of the relationships. Adventurism appears theoretically irrelevant. Five CEOs— Jeffrey Skilling, Bernard Ebbers, Richard Scrushy, Hank Greenberg, and Dick Cheney—bought political influence; all are “hostile.” Perhaps the purchase of political influence is valued even by CEOs who are self-absorbed and disinterested in affiliations because they view the value of the relationship secured by cash as form of insurance against unfavorable legal, political, and judicial results, as a valuable enhancement to the firm’s public reputation, or as an advance payment on any potential future liabilities. This CEO is also most likely to resist regulatory authorities in the implementation and enforcement of corporate law: for the ABC(D/d) CEO, cooperation as a rule, and cooperation with legal and regulatory authorities is anathema. Because regulators directly threaten his or her wealth, power, and status, the hostile, anomistic militarist will regard them as competitors in a zerosum game. In five cases of corporate scandal in the present study, CEOs resisted enforcement, and all five express AC in their personality profiles. e. AB(C/c)D The AB(C/c)D CEO is an authoritarian and nationalistic leader with prior military service who has low self-esteem and is isolated but has fierce ambition and competitive drive and regards the use of power as appropriate means to achieve ends. He or she is a self-absorbed, amoral individual who will not seek to build affiliations with others unless they serve his or her goal of achieving and protecting wealth, power, and status. His or her wildly optimistic belief that he or she can assert his or her will upon events to gain advantage over competitors will impel him or her to take great risks, and the AB(C/c)D CEO will be too fast to assume them and too optimistic to gauge accurately the probable outcomes of his or her decisions; the decision to violate environmental standards, which the AB(C/c)D CEO is more likely to make than any other personality profile, will be an ill-considered choice that takes into consideration neither the likely probabilities of detection nor the costs and benefits of noncompliance to the firm. In the ten cases of corporate scandal, only one CEO—Dick Cheney, who is scored ABCD—engaged in environmental violations. f. AbC(D/d) The AbC(D/d) CEO is an authoritarian and nationalistic leader with prior military service who has low self-esteem and is isolated but has fierce ambition and competitive drive and values he use of power to achieve ends. He or she is a self-absorbed individual who will not build affiliations with others unless they serve his or her goal of achieving and protecting wealth, power, and status. He or she will not trust others and will regard employees, investors, business partners, and even politicians in solely instrumental terms: their worth to him or her will be measured simply by whether they advance his or her goals, and if they do not he or she will bear them an animus, particularly if they are of different social groups than him or her. For the AbC(D/d) CEO, however, while the business arena is for combat, law and legal authorities are important in regulating its extremes, and he or she may well be knowledgeable about law generally and corporate law specifically and governed by independent sources of moral restraint. Thus, while he or she may direct the firm to engage in corporate illegality that inflates the financial health of the firm and wins wealth, power, and status, his or her lack of anomism may attenuate the extent or severity of any legal transgressions to which the AbC(D/d) CEO commits the firm. The AbC(D/d) CEO is more likely than other CEOs to lead a firm that restates earnings during his or her tenure as a consequence of violations of various aspects of CLC. Of the ten CEOs studied, two have personality profiles that include the constructs AbC—Hank Greenberg and Angelo Mozilo—but only one was required to restate earnings as a result of the commission of legal violations. 2. Personality Profiles a. “The Outlaw” A CEO with the personality profile ABCD—militaristic, anomistic, hostile, and adventuristic—is a corporate disaster incarnate. “The Outlaw”607 is a human predator who will demand inflated compensation, abuse employees, violate environmental laws, buy political favors, and direct the commission of serious financial and securities violations that will trash the good name of the firm, trigger analyst inquiries, require restatements of earnings, incur the wrath of Congress and the media, destroy evidence and obstruct justice, and lead the firm down the scandalous road to falling stock prices, dwindling earnings, civil and criminal penalties, and bankruptcy and dissolution. The Outlaw will deny any wrongdoing and blame others for personal and corporate misfortunes and show no remorse for his or her actions. Although he or she may forfeit some illgotten gains and lose some of his or her freedom for a while, the Outlaw will become extremely wealthy in the process and may even live to ride again. b. “The Rustler” The personality profile aBCD—nonmilitaristic but anomistic, hostile, and adventuristic—appears almost indistinguishable from The Outlaw at first blush, 607 The four personality profiles of the ten CEOs in the present study are assigned names drawn from a set of stock characters common to American Westerns that are as stylized and precisely defined as the characters of the Italian Renaissance Commedia dell’Arte or the Japanese Kabuki Theatre. The universality of the characters, themes, and conflicts is part of what makes Westerns so compelling as art and entertainment, and their use here is meant to invest the experimental profiles with meaning and color. See Western Characters, TV ROPES http://tvtropes.org/pmwiki/pmwiki. php/Main/WesternCharacters (last visited Feb. 22, 2015). yet “The Rustler” is less aggressive, less competitive, more likely to work in groups, and less in need of stroking to boost self-esteem than his or her cousin. Whereas The Outlaw steals by daring daylight raids and seeks worldwide fame, The Rustler works by stealth and in the dark and prefers to be nameless and faceless as he or she grows the herd. However, the ultimate result to the firm of hiring The Rustler as CEO is similarly destructive: The Rustler will quietly violate antitrust laws, fix prices or production levels, commit industrial espionage, manipulate the free operation of the markets, and so badly mismanage the firm that it will suffer bankruptcy and dissolution. Of course, The Rustler will deny responsibility and point the finger at others for the downfall of the firm. c. “The Rancher” “The Rancher”—militaristic but non-anomistic, hostile but not adventuristic—is committed to nothing more than the safety of his or her herd and its value at market, and he or she is threatened in this by Outlaws and Rustlers. He or she is ready, willing, and able to use force to protect the herd, which he or she and his or her cowboys drive hard. He or she lives on the open range, distrusts and dislikes cowboys and Indians he or she does not know, and has little to do with townspeople except at market time. If the Sheriff or his Deputy should call upon him or her for assistance, “The Rancher”—committed to and reliant upon the rule of law and courts as the first line-of defense of his or her stock—will offer his or her support, but he or she otherwise remains aloof and out of the fray. As CEO, The Rancher will generate and expend significant political and social capital, and take and pay bribes, to prevent and minimize problems the firm might face. While it may have to restate earnings, the firm will not engage in serious violations of the law under The Rancher, who will fulfill his or her mission: to shield the firm against predators and husband it to abundance. d. “The Mayor” “The Mayor”—personality profile ABCd—is a vainglorious individual who abuses his or her office for personal gain without care for the townsmen or the rule of law, and the only cause for which he or she will expend personal resources is to ensure re-election. As CEO, The Mayor will violate financial regulations, engage in bribery and buy and sell political influence, and obligate the firm to restate earnings to reflect the damage done to shareholders. When scandal erupts The Mayor will spend the significant political influence he or she has purchased to resist enforcement and avoid legal penalties, but if the firm does incur sanctions The Mayor will scapegoat underlings. Unseating The Mayor as CEO is possible; bringing The Mayor to account for misdeeds is quite another matter. IV. CRITICISMS AND DIRECTIONS FOR FUTURE RESEARCH A. Criticisms and Responses 1. Reductionism Those with intellectual commitments to theories that regard other levels of analysis as more fundamental to the explanation of the behavior of firms may dismiss personality as little more than “a magic slogan to charm away the problems that [their] intellectual tools don’t handle.”608 Others may take exception to the claim that personality, rather than firm, industry, or national culture, the powers and makeup of boards of directors or auditors, CMPs, the availability of comprehensive and “toothy” legal regimes, or the courage of whistleblowers, is central to explanations for firm decisions regarding CLC; for these critics, personality constructs are “noisy” variables, and the reductionism of PT will invariably be sacrificial of explanatory and predictive power.609 Indeed, the “perfect” model of CLC might well treat firm behaviors as resulting from a combination of causes and in turn amalgamate insights and variables from all pre-theories and all levels of analysis. However, such a model would be so cumbersome and so difficult to conceptualize and apply that some reductionism would be necessary to permit replication and falsification. Neither the naïve view of CLC as the mere projection of personalities nor the belief decision-making is entirely insulated from the effects of personality enjoys empirical support. If firm behaviors could be explained solely by reference to the personalities of CEOs, there would be no discernible pattern of behavior at variance with predictions derived from the analysis of those personalities. The data do not support this conclusion. Still, personality is not epiphenomenal to CLC: although there may be circumstances in which all CEOs will decide identically, decisions as to at least some of the most relevant outcomes appear to be influenced by personality. 608 HERBERT SIMON, ADMINISTRATIVE BEHAVIOR: A STUDY OF DECISION-MAKING PROCESSES IN ADMINISTRATIVE ORGANIZATION 23 (1947). 609 CAMPBELL JONES, MARTIN PARKER & RENE TEN BOS, FOR BUSINESS ETHICS: A CRITICAL APPROACH 4 (2005). 2. Lack of Parsimony Personality theories are difficult to test empirically, and researchers must expend labor, time, and resources to acquire knowledge about the subjects of investigation, as well as requisite training in psychobiographical research, qualitative methodology, and formal modeling. Critics, however, should concede that a theory attempting to offer relevant explanations and predictions of CLC, a phenomenon of great complexity, will be similarly complex. If parsimony, rather than explanatory and predictive power, is the measure of success, there are grounds for concern. However, if the present theory harnesses as much explanatory and predictive power as can be corralled at present, it behooves those who would fault its lack of parsimony to develop the research and experimental techniques that will enable collaboration in the field. 3. Ecologically Fallacious Some may fault the present theory for presuming associative relationships that obtain within a very small “n” of cases can be generalized to the universe of potential CEOs. Indeed, there may be another set of personality constructs that generates better explanatory and predictive power, and it is possible replication studies will score decision-makers differently and reach contrary findings. Generalizing inductively from a very small number of cases is inherently problematic, for anomalous individual cases are more likely to drive findings than they will in larger populations. However, because the data employed herein nearly spans the universe of major corporate scandals over the last fifteen years, it is not a sample in the scientific sense, and, thus, inferences need not necessarily build upon skewed data. Moreover, the conclusions of the present study are conditional and intended to explain a very limited number of contextdependent cases of corporate scandal and serve as points of departure for further research. 4. Data Defects and Selection Bias The data is not voluminous. In one case, a single primary source was used to develop a CEO personality profile, and the potential for bias and other errors is magnified. Moreover, psychobiographical research, always arduous, is especially so when analyzing CEOs who, although they enjoy celebrity, do not inspire nearly so much biographical work as do heads of state and entertainers. Further, the cases chosen have been included specifically because the CEOs had already been mired in corporate scandal. Many other CEOs about whom as much has been written have not, and, although this is not guarantee against their guilt, the presumption runs in their favor. Studies of other CEOs, including those who have not been publicly linked with violations of corporate law, will be undertaken in future research to develop and refine the present theory. B. Directions for Future Research 1. Experimental Research Only four distinct combinations of the four personality constructs have been identified in the personality profiles of CEOs who presided over corporate scandals: ABCD, aBCD, AbCd, and ABCd. However, these four personality constructs generate 24, or sixteen, possible combinations. Twelve combinations of the four constructs exist theoretically within a sufficiently numerous population but cannot as yet be identified, analyzed, and placed in a truth table. When, as here, the historical record fails to exhaust all possible combinations of personality constructs, it is impossible to specify necessary and sufficient causality in respect of any particular outcome, unless the historical record can be augmented either through the passage of time and the availability of additional corporate scandals, or by the production of additional cases in an experimental setting. Data associated with experimental profiles and derived from survey and simulation research can be integrated with historical data and subjected to QCA. 2. Additional Dependent Variables and Intervening Variables Investigation of associative relationships between personality and additional CLC outcomes will expand the scope of the present study. Moreover, future iterations of this research may reveal the substance and process of decisions regarding CLC are in effect intervening variables to which greater theoretical significance may be attributed. 3. Quantitative Analysis Generation of simulated cases of CLC will allow introduction of quantitative methods, including content analysis and pathways analysis, to complement QCA. Multivariate statistical analysis—principal components or best subsets regression analysis—may suggest one or more IVs can be dropped from the theory without sacrificing explanatory power. More powerful theories may be built by including additional IVs, and the scope may be extended to additional DVs. Integration of variables drawn from other levels of analysis may aid in determining the causal significance of personality-level variables relative to inputs from the international political economy, the political and economic character of states, and the nature of organizational-cultural units. V. CONCLUSIONS Why do CEOs rob corporations? Willie Sutton, were he alive, might look around and reply, yet again, “Because that’s where the money is.”610 The market value of the top twenty-five Fortune 500 firms is approximately $4 trillion. Yet, times have changed since 1934. The investor class has moved its cash from banks into equity shares in public firms. The crooked class no longer grabs its loot by brandishing weapons, informing bank tellers that “this here’s a stick-up,” and shooting G-men on the way out; now it cooks the books, talks up stock before selling short, and lies to Congress. Moreover, robbery today is far bigger business than in the 1930s when career criminals like Willie Sutton became famous for blasting their way out of banks with $20,000 in currency. In the last fifteen years, rogue executives made away with $1 trillion in shareholder assets and killed enough jobs to employ the city of Houston. In response, prosecutors have claimed several celebrity CEOs as trophies and Congress, eager to assuage defrauded voters, has imposed stricter—and far more expensive—legal obligations upon public firms. Yet, despite the valiant efforts of legal architects to deter corporate scofflaws, no one seriously believes legislative package cobbled together will hand regulators the silver bullets necessary to slay the seemingly immortal criminal class. Wherever the money is, the crooks will flock. For the same reason, CMPs, statements of new practices from overhauled boards of directors, encomiums to ethical decision-making, and other paraphernalia of the post-Enron “corporate ethics” era, while packed with symbolic meaning, are too often worth no more than the paper upon which they are printed or the air into which they are uttered. One need only read the twenty-odd pages of Enron’s Code of Ethics, written long before that firm slid into the abyss, to grasp this sobering truth. Managers understand, or quickly learn, crime often pays, but CMPs will not pick up a check, and modification of perquisites, bolstering of the independence of auditors, and public support for corporate social responsibility initiatives eat at the bottom line. Yet, if the status quo is intolerable, what then is to be done to save managerial capitalism from itself? For the foreseeable future, firms will continue to be the latter-day equivalent of banks—where the money is—for the vast American middle class. Does the temptation caused by access to a great deal of Other People’s Money invariably corrupt managers, and is law thus epiphenomenal to firm behavior? Access to the vault is far easier to come by circa 2014 for corporate executives with prestigious MBAs than it was for Depression-era crooks with Thompson submachine guns. Is the solution 610 See SUTTON supra note 2. inherent in the content or the enforcement of the law itself? Is there a perfect constellation of legal regime, CMPs, and ethics instruction that can spontaneously induce a degree of corporate compliance sufficient to overcome the urge to simply take the money and run? Instead of incarcerating Jeffrey Skilling for twenty-four years, should we broadcast his public beheading on payper-view television from Enron Plaza in Houston, with the proceeds donated to Enron’s creditors? If our faith in the ability of the academy to implement a reformation of the ethics of adult students is weak, and if our taste for the blood of white-collar criminals is underdeveloped, we must return to the beginning: “Why do CEOs rob corporations?” If we ask again, emphasizing the third, rather than the last, word, it may be possible to provide answers. Some CEOs—but only some CEOs—rob corporations. They do this not only because that is where the money is but because that is who they are. Other CEOs dutifully discharge their fiduciary and civic responsibilities while enriching their employees, their investors, and the communities in which they do business for the very same reason: that is who they are. It is vexing that one cannot readily explain or predict why any given CEO enters the robbers’ den or honestly shepherds the firm. Yet, it is possible, if one learns to read the runes of personality, to divine the general path a firm will follow under the leadership of any particular CEO. Undertheorization, and not the inherent greed of mankind or the incommensurability of law and business, is truly the bane of CLC. Researchers must dedicate energies to the empirical study of the relationships between rules and behaviors if the desiderata attendant to compliance— fundamental fairness and efficiency in the operation of the markets, maximization of shareholder wealth, just compensation of the managerial class, elimination of political corruption, equality of opportunity, general promotion of respect for law, and effective legislative oversight of national commerce—are to be secured, in part, through the contributions of scholarship. This program need not exclude any school of thought or methodology. Although human agency is crucial and individual-level variables are indispensable to explanations and predictions of CLC, the most sophisticated model will incorporate insights from all pre-theories and variables from multiple levels of analysis, including the nature of the international political economy, the regulatory and judicial culture of the state, dyadic interactions with other states and firms, the organizational cultures of firms, the dynamics of decision teams, and even neuroeconomic inputs. No single method, paradigm, or discipline will harvest all that is knowable about CLC. Each will inform the others regardless of its pretensions. Still, if the present account of the relationship is inchoate, the salience of personality to CLC is an existential reality. Without an account of the linkages between rules and behaviors, any attempt to enhance CLC by altering the existing regime will succeed only by the intervention of Fortune. In other words, achieving substantial compliance with corporate law is not merely a matter of the conjuration and codification of proper rules and institutions. Rather, it is to the selection and training of the right people to administer, interpret, and implement the normative content animating legal rules and institutions to which all stakeholders must direct the bulk of their attention.611 Because much of the variation in CLC is attributable to personality, manipulation of the legal rules may well be a useless venture without simultaneous manipulation of CEO personalities, either through training or, more likely, by incorporating analysis of compliance propensities within the matrix of considerations governing CEO selection by boards of directors or shareholders. Firms should take seriously the personalities of those whom they consider for the position most responsible for shaping the values, decisions, and futures of the firm and its stakeholders. Hostile and adventuristic CEO applicants, and to a lesser extent those who are militaristic and anomistic, may well gut the firms that hire them, while CEOs with profiles that de-emphasize these constructs may well provide the sound and steady leadership that navigates legal shoals and stewards firms to good long-term results. Unless and until neo-Marxists or Islamic fascists topple the state and establish industrial communes or a waqf, corporations will always be “where the money is” and will always attract criminals bent on robbery. However, firms may also be fortunate enough to draw enlightened trustees who would safeguard their wealth by implementing the most effective of legal strategies: specifically, contesting, within established political and legal boundaries, every creation, interpretation, and application of law that runs contrary to shareholders’ interests, but scrupulously—even monastically—adhering to the letter and spirit of authoritative determinations of legal obligation once those determinations issue. The vast majority of would-be CEOs will orient themselves on a continuum between these poles. Accordingly, CLC is a primary constituent of a corporate strategy that requires a firm not only to select industries and markets in which to compete and methods to develop and sustain competitive advantage but to decide whether and how it will live out the meaning of the following creed: CEOs—not firms—decide whether or not to comply with law, and their choices have profound implications for their firms, their communities, and their nations. Compliance with law is an act not merely of corporate social responsibility but of self- and national-preservation. For, although both are created with a theoretically infinite lifespan, neither 611 “Virtue ethicists” suggest managers with the proper values, motivations, and attitudes—and not simply those who reason from correct principles—are most likely to do what “virtue” requires of a good manager in given circumstances. See, e.g., R.C. SOLOMON, ETHICS AND EXCELLENCE: COOPERATION AND INTEGRITY IN BUSINESS (1992). 32 “ Ideal types” are theoretical constructs that model selected aspects of the empirical world and permit comparative assessment of the extent to which those aspects exist in a particular, real case . Max Weber , “ Objectivity” in Social Science and Social Policy, in THE METHODOLOGY OF THE SOCIAL SCIENCES 49 (Edward A. Shils & Henry A Finch trans . & eds. 1949 ). 33 Paul C. Stern, Why do People Sacrifice for their Nations?, 16 POL . PSYCHOL. 217 ( 1995 ). 34 VAMIK VOLKAN, THE NEED TO HAVE ENEMIES AND ALLIES 88 , 94 - 95 ( 1988 ). 35 Hank Denker , Darina Malova & Sander Hoogendorn, Nationalism and Its Explanations , 24 POL. PSYCHOL. 345 , 350 ( 2003 ). 36 David Winter , Margaret G. Hermann, Walter Weibtraub & Stephen G. Walker, The Personalities of Bush and Gorbachev Measured at a Distance: Procedures, Portraits, and Policy , 12 POL. PSYCHOL. 215 , 231 ( 1991 ). 37 A. LUDWIG , KING OF THE MOUNTAIN: THE NATURE OF POLITICAL LEADERSHIP 3-4 ( 2002 ). 47 LINDA O. VALENTY & OFFER FELDMAN , POLITICAL LEADERSHIP FOR THE NEW CENTURY: PERSONALITY AND BEHAVIOR AMONG AMERICAN LEADERS 73 ( 1999 ). 48 DOTLICH & CAIRO, supra note 45, at 128-30. 49 TOM R. TYLER , ROBERT J. BOECKMANN , HEATHER J. SMITH & YUEN J. HUO , SOCIAL JUSTICE IN A DIVERSE SOCIETY 3 ( 1997 ). 50 Kenneth G. Dau-Schmidt , An Economic Analysis of the Criminal Law as a PreferenceShaping Policy, 1990 DUKE L .J. 1 , 1 ( 1990 ). 51 H.R. Rodgers Jr. & E.B. Lewis , Political Support and Compliance Attitudes, 2 AM . POL. Q. 61 ( 1974 ). Table V: Probabilistic Statements of Association A militaristic CEO associates with violation of financial regulation in 7 of 10 cases (70%) and


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William C. Bradford. “Because That's Where the Money Is”: A Theory of Corporate Legal Compliance, The Journal of Business, Entrepreneurship & the Law, 2015,