- Monitoring managers through corporate compliance programs
- Number of pages
- Amsterdam: Universiteit van Amsterdam, Amsterdam Center for Law & Economics
- Amsterdam Center for Law & Economics working paper
- Volume | Edition (Serie)
- Document type
- Working paper
- Interfacultary Research Institutes
Faculty of Economics and Business (FEB)
- Amsterdam Center for Law & Economics (ACLE)
Amsterdam Business School Research Institute (ABS-RI)
Compliance programs entail monitoring of employees' behavior with the claimed objective of fighting corporate crime. (Competition) Authorities promote such intra-firm monitoring. In a three-tier hierarchy model, authority-shareholder-manager, we study the impact of monitoring through a compliance program on contracting within the firm and the authority's optimal sanctions and leniency policy. We find that compliance programs are beneficial in the fight against corporate crime if and only if the managerial sanction is low. Moreover, when the shareholder blows the whistle, the authority optimally grants partial corporate leniency, while not granting individual leniency to the involved employees. Conversely, when the employee blows the whistle, the authority grants individual leniency if and only if the expected managerial sanction is either particularly high or particularly low. Finally, we find that the authority does not apply a discount on the corporate sanction for the mere fact of having adopted a compliance program. We discuss our results in the light of the US and EU Corporate Leniency Program, US Individual Leniency Program and US Sentencing Guidelines.
If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library, or send a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible.