How pervasive is corporate fraud?

• 成果类型: Article
• 署名作者: Dyck, Alexander; Morse, Adair; Zingales, Luigi
• 署名单位: University of Toronto; University of California System; University of California Berkeley; National Bureau of Economic Research; University of Chicago; Centre for Economic Policy Research - UK
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-022-09738-5
• 发表日期: 2024
• 页码: 736-769
• 关键词: cost; governance; reputation; Auditors; FIRMS

摘要

We provide a lower-bound estimate of the undetected share of corporate fraud. To identify the hidden part of the iceberg, we exploit Arthur Andersen's demise, which triggered added scrutiny on Arthur Andersen's former clients and thereby increased the detection likelihood of preexisting frauds. Our evidence suggests that in normal times only one-third of corporate frauds are detected. We estimate that on average 10% of large publicly traded firms are committing securities fraud every year, with a 95% confidence interval of 7%-14%. Combining fraud pervasiveness with existing estimates of the costs of detected and undetected fraud, we estimate that corporate fraud destroys 1.6% of equity value each year, equal to $830 billion in 2021.