abstract / Economics and Finance / Doctoral / Doctor of Philosophy

The pillaging of companies by those who control them is becoming a common occurence in South Africa. The problem arises where those in control of a company are its sole shareholders and the property they are charged with stealing, though not legally belonging to them, is vested in an entity which itself belongs to them. One defence is that there can be no theft where the company consents to the appropriation of its funds. It is argued that a theft is committed only where all the criminal elements of the crime of theft are satisfied, notwithstanding the consent, or absence thereof, by the company. Case law indicates that a conviction depends on the : solvency or insolvency of the company; degree of control and victim of the appropriation. It is submitted that it is inappropriate to base a conviction on these criteria. All abuses of the corporate structure should be punished. / Mercantile Law / LL. M.

違規給企業帶來的主要後果是企業名譽的損失。然而，我們對以下問題卻知之甚少：企業在違規事件中是怎樣損失名譽的？為什麼同樣程度的違規給不同企業帶來的名譽損失卻不同？等等。本文綜合了來自犯罪學、財務學和社會心理學方面的文獻，把企業名譽定義為利益相關者對企業的情感，同時把違規事件看成是導致這種情感變化的誘因。 / 本文構建了一個綜合的理論模型，研究企業股東和企業自身的情感和情感變化。首先，本文提出，企業違規違反了股東對企業的道德期望和基本情感，使股東的情感發生偏移，並最終導致企業名譽的損失。在情感偏移的形成過程中，股東傾向于根據違規線索的診斷性特徵，把他們的基本情感用作透視鏡或者參照點來評價違規企業。第二，本文認為，違規企業通過在致歉公告中列出恢復性行動或語言，可以恢復股東對企業的基本情感並且減少企業名譽的損失。然而在情感恢復過程中，股東傾向于將恢復性行動或語言的心理距離與違規線索的心理距離進行比較，並據此調整他們對企業的評價和情感。第三，與其他違規企業相比，那些表達了愧疚感的違規企業在未來會約束自己的行為，降低了反復違規的傾向。但是隨著本次懲罰強度的不同，以及企業直接或間接地被懲罰經歷的不同，違規企業對本次懲罰的目的和道德意義的評價也會不同，並由此影響企業表達愧疚感的傾向。 / 本文的貢獻主要集中在以下四個方面。首先，通過強調情感在企業和股東關係中的重要性，豐富了關於公司治理的研究。第二，本文從情感視角去探討存在于股東和企業在資訊評價中各種的偏見，而這些偏見會影響他們對違規事件的情感和行為反應，以此拓展了集中於經濟視角的企業違規研究。第三，本文通過借鑒解釋層次理論中的觀點來研究企業恢復性行動和語言的特徵以及他們在股東情感恢復和企業榮譽恢復過程中的作用，這豐富了關於企業層的影像管理和危機管理研究。第四，本文通過強調企業內化懲罰在約束企業違規行為方面的作用，這對補充了關於懲罰的研究，並具有現實意義。 / A consequence of corporate fraud studied in the literature is reputational penalty on the fraud firm. However, little is known about how a fraud firm loses its reputation after the fraud incident and why firms receive different levels of reputational penalty given the same level of fraud severity. Integrating literatures from criminology, finance, and social psychology, this dissertation conceptualizes firm reputation as stakeholders’ (mainly shareholders here) sentiment toward the firm and a fraud incident as a trigger of shareholders’ sentiment changes. / In this dissertation, I develop an integrated model that examines the sentiment changes of shareholders and sentiment restoration efforts made by the fraud firms. In the first study, I propose that corporate fraud violates shareholders’ normative expectations and fundamental sentiments toward the fraud firm, which leads to shareholders’ sentiment deflection and subsequently propels them to implement behavioral penalty on the fraud firm, that is, reputational penalty. During the process of sentiment deflection, shareholders tend to use the fundamental sentiment that they have adapted to as reference points to evaluate the fraud firm, depending on the salience of the fraud incident and the salience of the fraud firm. In the second study, I argue that the fraud firm can restore shareholders’ sentiment and minimize its reputation loss by expressing restorative actions in public apology announcement. However, during the process of sentiment restoration, shareholders tend to adjust their evaluation of the firm based on the relative psychological distance of the restorative actions compared with that of the fraud cues and sentiment cues. The third study focuses on guilt sentiments of the fraud firm, which have been found to have long-term impact on the fraud firm by transforming their future behaviors. I propose that fraud firms that express guilt sentiments after fraud punishment are more likely to restrain from repeated fraudulent behaviors in the future. However, variations in punishment intensity, together with the fraud firms’ direct and indirect punishment experiences, will influence their tendency to express guilt sentiments. / This dissertation aims to offer several contributions. First, by underscoring the importance of sentiment in the firm-shareholder relationship, it contributes to the corporate governance literature that mainly uses cognitive frameworks in the analysis. Second, it takes a sentiment approach to explore various biases embedded in shareholders’ and the firm’s evaluation of the informational cues that could influence their sentimental and behavioral reactions to the fraud incident, thus extending the corporate fraud literature that predominantly focuses on economics perspectives. Third, by examining the characteristics of firms’ restorative actions and languages and their effects on shareholders’ sentiment restoration and firm reputational repair, this dissertation contributes to the literatures of corporate turnaround and organizational-level impression management. Finally, it also contributes to the punishment literature by highlighting the internal transformation of the fraud firms, thus providing implications to stock exchange regulator and policy-makers in emerging economies. / Detailed summary in vernacular field only. / Detailed summary in vernacular field only. / Detailed summary in vernacular field only. / Xu, Yuehua. / Thesis (Ph.D.)--Chinese University of Hong Kong, 2012. / Includes bibliographical references (leaves 117-137). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstract also in Chinese. / ABSTRACT --- p.I / CHINESE ABSTRACT --- p.III / ACKNOWLEDGEMENTS --- p.V / LIST OF TABLES --- p.IX / LIST OF FIGURES --- p.X / Chapter CHAPTER 1 --- INTRODUCTION --- p.1 / Chapter 1.1 --- Motivation and Research Questions --- p.1 / Chapter 1.2 --- Theoretical Framework and Premise --- p.4 / Chapter 1.3 --- Contributions --- p.9 / Chapter 1.4 --- Organization of the Dissertation --- p.11 / Chapter CHAPTER 2 --- STUDY ONE: A SENTIMENT MODEL OF FIRM REPUTATIONAL PENALTY FOLLOWING CORPORATE FRAUD --- p.13 / Chapter 2.1 --- Introduction --- p.13 / Chapter 2.2 --- Theoretical Background --- p.15 / Chapter 2.2.1 --- Corporate Fraud and Reputational Penalty --- p.15 / Chapter 2.2.2 --- Sentiment --- p.19 / Chapter 2.3 --- Theoretical Framework and Hypotheses --- p.21 / Chapter 2.3.1 --- Re-conceptualization of Firm Reputation and Theoretical Framework --- p.21 / Chapter 2.3.2 --- Stimuli - Sentimental Reaction - Behavior: The Process from Fraud Detection to Reputational Penalty --- p.26 / Chapter 2.3.3 --- Adaptive Levels of Moral Sentiment and Sentiment Rigidity --- p.28 / Chapter 2.3.4 --- The Moderating Effects of Cue Diagnosticity and Firm Visibility --- p.30 / Chapter 2.4 --- Methods --- p.34 / Chapter 2.4.1 --- Empirical Setting --- p.34 / Chapter 2.4.2 --- Sample and Data Collection --- p.35 / Chapter 2.4.3 --- Measurement --- p.37 / Chapter 2.5 --- Results --- p.45 / Chapter 2.6 --- Discussion --- p.56 / Chapter CHAPTER 3 --- STUDY TWO: FIRM RESTORATIVE EFFORTS AND REPUTATIONAL REPAIR AFTER CORPORATE FRAUD --- p.59 / Chapter 3.1 --- Introduction --- p.59 / Chapter 3.2 --- Theoretical Background --- p.61 / Chapter 3.2.1 --- Firm Efforts to Turn Around from Fraud Incidents --- p.61 / Chapter 3.2.2 --- Apology --- p.63 / Chapter 3.3 --- Theoretical Framework and Hypotheses --- p.65 / Chapter 3.3.1 --- Sentiment Restoration and Pragmatic Attitudes toward Restorative Efforts --- p.65 / Chapter 3.3.2 --- The Construal Level of Restorative Cues --- p.68 / Chapter 3.3.3 --- The Distance of Problem Cues: The Delay of Punishment --- p.70 / Chapter 3.3.4 --- Shareholders’ Negative Sentimental Reaction: Media Negative Comments --- p.72 / Chapter 3.4 --- Methods --- p.74 / Chapter 3.4.1 --- Sample and Data Collection --- p.74 / Chapter 3.4.2 --- Measurement --- p.75 / Chapter 3.5 --- Results --- p.79 / Chapter 3.6 --- Discussion --- p.84 / Chapter CHAPTER 4 --- STUDY THREE: THE EFFECTS OF PUNISHMENT ON FRAUD FIRMS’ GUILT SENTIMENT EXPRESSION --- p.86 / Chapter 4.1 --- Introduction --- p.86 / Chapter 4.2 --- Theoretical Background: Punishment --- p.88 / Chapter 4.3 --- Theoretical Framework and Hypotheses --- p.90 / Chapter 4.3.1 --- The Expression of Guilt Sentiment and Repeated Fraud --- p.91 / Chapter 4.3.2 --- Punishment Intensity and Guilt Sentiment --- p.93 / Chapter 4.3.3 --- Normalization: The Moderating Effects of Direct and Indirect Punishment Experience --- p.95 / Chapter 4.4 --- Methods --- p.98 / Chapter 4.4.1 --- Sample and Data Collection --- p.98 / Chapter 4.4.2 --- Measurement --- p.99 / Chapter 4.5 --- Results --- p.102 / Chapter 4.6 --- Discussion --- p.110 / Chapter CHAPTER 5 --- DISCUSSION AND CONCLUSION --- p.111 / Chapter 5.1 --- Conclusion --- p.111 / Chapter 5.2 --- Contributions to Theory and Practice --- p.112 / Chapter 5.3 --- Limitations and Implications for Future Research --- p.115 / REFERENCES --- p.117

The pillaging of companies by those who control them is becoming a common occurence in South Africa. The problem arises where those in control of a company are its sole shareholders and the property they are charged with stealing, though not legally belonging to them, is vested in an entity which itself belongs to them. One defence is that there can be no theft where the company consents to the appropriation of its funds. It is argued that a theft is committed only where all the criminal elements of the crime of theft are satisfied, notwithstanding the consent, or absence thereof, by the company. Case law indicates that a conviction depends on the : solvency or insolvency of the company; degree of control and victim of the appropriation. It is submitted that it is inappropriate to base a conviction on these criteria. All abuses of the corporate structure should be punished. / Mercantile Law / LL. M.

Corporate corruption is a widespread phenomenon that persists in the functioning of both public and private companies of differing size, performance, industry, and national origin. As it generates negative effects both within and outside the organization, corporate corruption has been the subject of scholarly research. Yet, despite attempts to understand its antecedents and consequences, companies continue to struggle to eliminate corruption in their business practices. Thus, the overarching research question for this dissertation is "Why do companies continue engaging in corruption?" To answer this research question, I focused on the topic of organizational corruption control, i.e., a set of mechanisms that purposefully target the prevention of corrupt practices within an organization. Specifically, I investigated the trident of organizational corruption control via its effects and implications on three constructs - corporate social performance, opportunity attractiveness of organizational corruption and corporate corruption recidivism. Using distinct methodologies, I examined corporate corruption control in three separate studies to address 1) the effect of corruption control on the opportunity attractiveness of organizational corruption 2) the effect of corruption control on corporate social performance and 3) the implication of ineffective corruption control on organizational corruption recidivism. Based on interdisciplinary theoretical perspectives and several secondary data sources, the hypothesized effects were empirically tested and insights were derived from a multiple case study approach. The three studies used different firm samples. Study 1 was based on the data of the United States enforcement actions for violations of the 1977 Foreign Corrupt Practice Act (FCPA) formally prohibiting foreign bribery; firm-level data from the Bloomberg terminal; and a country-level measure from Worldwide Governance Indicators. In Study 1 (N=71 firms involved in foreign bribery), results supported hypotheses that regulatory sanctioning in host countries and bureaucratic controls at a firm level were negatively correlated with corruption opportunity attractiveness. Furthermore, vigilance controls help strengthen negative effect of bureaucratic controls on corruption opportunity attractiveness. Study 2 was based on reports of anti-corruption programs of the world's largest companies from Transparency International, corporate social performance scores from CSRHub, and firm-level financial indicators from the Bloomberg terminal. The findings of Study 2 (N=102 firms) supported hypothesis that corporate corruption controls positively affect Sustainable Resource Management, a sub-dimension of CSP. Importantly, the use of a cross-lagged design helped to specify that the relationship between Corruption Controls and CSP dimensions is not reciprocal (2-way) as was previously discussed in the literature. Study 3, was based on 6 cases of corruption recidivists identified via FCPA enforcements' database, and utilized data from court proceedings, annual reports, and news articles. Data were coded following prescribed steps to arrive at categories and themes. An inductive qualitative analysis performed in Study 3 resulted in a descriptive framework of ingenious deviance that underpins the profile of corporate corruption recidivists. The analysis revealed that a) a combination of underlying contextual and situational factors provided fertile ground for corruption, b) the phenomenon of recidivism occurred in the presence of multiple competing logics, and c) internal controls were subverted through ingenious deviance to facilitate bribery.

I examine the impact of real earnings management (REM) and corporate governance on cash holdings. Extant research documents an increase in both cash holdings and REM activity in recent years and shows that agency conflicts influence both the levels and valuations of cash holdings. Motivated by agency problems of REM and Jensen's (1986) arguments concerning the free cash flow problem, I investigate whether opportunistic asset sales and reductions in discretionary expenditures are associated with levels and valuations of cash holdings. Prior research also shows that strong corporate governance mitigates opportunistic earnings management behavior and enhances the valuation of cash holdings. Using empirical models from prior research, I document that REM is positively associated with cash holdings, investors discount cash holdings of high REM firms, and, among high REM firms, valuations of cash holdings of weak corporate governance firms are discounted significantly lower relative to those of strong corporate governance firms. My study unites two lines of research by incorporating agency problems concerning REM with levels and valuations of cash holdings. / by Adam J. Greiner. / Vita. / Thesis (Ph.D.)--Florida Atlantic University, 2013. / Includes bibliography. / Mode of access: World Wide Web. / System requirements: Adobe Reader.

Economic recession took effect in Malaysia in late 1984 and continued through 1985 and 1986. During this period, there was a sudden surge in economic crime. Its scale has Increased over recent years. When economic crime is on the increase, the costs to society are also increasing, not only in terms of money and property stolen by perpetrators, but also in terms of loss of confidence and respect by the public at large in our government. With the present rapid growth in business and commercial activities, economic crime has found a fertile ground. Economic crime is a 'growth industry'. Unless we study it, understand it, and develop tools to deal with it effectively, we may be witnessing only the beginning of a phenomenon that could undermine the social, economic and political stability of the country. Today's cost of economic crime in Malaysia is estimated to be more than $200 million a year. It victimises thousands of individuals. It undermines the very legitimacy of our institutions. With continued innovation in information and communications technologies, the dimensions of the problem expand; yet our legal and business systems cannot cope with what is happening today. In the opinion of the researcher, there can be little doubt that economic crime will continue to rob society as it has In the past. Despite its current scale, there has not been a study of economic crime In Malaysia. The reason is obvious; for a researcher to embark on a study in this particular area of criminal activity, there would need to be the accessibility to the highly sensitive data on such activities (while recognising that not all the crimes are detected). Many of the agencies charged with Investigation and prosecution of these non-traditional crimes, quite correctly, do not make their detailed findings public. Aggregated data, which are made available to the public, are often not sufficiently specific for research purposes. The secrecy of the Government agencies Is necessary in order for them to function effectively as law enforcement Instruments. Sutherland [1977, page 38] noted that explanations for crime could not be found in poverty alone; criminality is a much more complex phenomenon. For example, he noted that poverty Is no explanation for crimes of the rich and the professional segments of the society. It is noted by this researcher in his three years experience as the Head of Banking and Financial Investigations at the special unit of the Commercial Crime Department, Police Headquarters, Kuala Lumpur, that the problems In dealing with economic crimes could not be addressed in the same manner as In traditional crime. Studies were needed to explain and understand these crimes. From this knowledge base, there would be a better opportunity to formulate policy strategies to address the problems. This research, even though focussing in Malaysia, is meant to act as a springboard for future research within the researcher's organisation, the Royal Police Force of Malaysia, and also at least be useful for new Developing Countries which may have to encounter a similar economic crime phenomenon. The study also examines the major economic institutions in Malaysia such as cooperatives, insurance and stock-exchange and concludes that some of the main causes of economic crime are problems of management. They are: * poor quality and laxity of discipline and management; * financial and technical mismanagement in the operation of companies; * breaches of the law; * poor documentation and record keeping practices; * inadequate and ineffective control system. The findings of the research survey shows that the causes of economic crime in Malaysia are consistent with situational, opportunity and personal pressures. Economic crime in Malaysia is largely due to people who are in position of trust, who have abused their powers in a situation of poor accounting practices. Economic crime could possibly be prevented by improving the system of auditing, improving the management information system and improving the management environment.

A research report submitted to the Faculty of Commerce, Law and Management at the University of the Witwatersrand in partial fulfilment of the requirements for the degree of a Masters in Commerce. March 2016 / The purpose of this study was to determine whether there is a systematic difference in the textual characteristics of information in the chairman’s statement of profitable and unprofitable companies on the JSE main board. This would indicate the existence of impression management in management commentary. The difference of profitable and unprofitable companies was analysed in relation to six pre-determined textual characteristics. The primary conclusion drawn is that impression management does exist in the chairman’s statements of companies listed on the main board of the JSE. Another finding of the study was that ‘extremely unprofitable’ companies are less likely to employ impression management. The findings of this research indicate that users of annual reports should be alert to the existence of reporting bias introduced by management in its commentary. Users of the annual report should carefully consider the usefulness of management commentary in their decision making, discounting these disclosures for the use of impression management techniques employed in corporate reporting strategies. Studies on impression management techniques in narrative disclosures within the annual report have not been piloted in South Africa before. This is the first study of linguistic variation employed in management commentary within the South African context. The study was exploratory in nature and did not set out to identify the causes of impression management being employed within the South African context. Future research may explore this further and may also be extended to determine whether impression management is present in other sections of the annual report and even the integrated report. Key words: Chairman’s statement, impression management, management commentary, reporting bias / MT2017

The objective of this study was to assess the affect of economic performance, relative performance and corporate structure on the frequency of corporate crime. The data utilized in this study were obtained from the Inter-university Consortium for Political and Social Research and were originally collected by Marshall Clinard and Peter Yeager (1979). In addition to this data source, disaggregated economic data were collected in order to assess the volatility of economic performance for the corporations in the study. The collected data were then merged with the existing data set using the corporate identification numbers provided with an agreement of anonymity. Pearsons's r was used to assess the zero-order relationships among all the variables in the analysis. A series of T-tests were also performed to examine whether offending corporations had significantly lower economic performance measures than did their non-offending counterparts. Finally, multiple regression techniques were utilized to assess the predictive capability of economic performance and corporate structure on corporate offending. The bivariate analysis showed little correlation among the economic performance variables and the total and total serious violation categories. Concentration and diversification were significantly correlated with the violation categories. Diversification was also found to be highly correlated in a negative direction with all of the volatility measures. Similar results were found when analyzing the relative performance measures. When comparing the mean economic scores of offending and non-offending corporations, mean performance was generally lower among offending corporations. Offending corporations, however, were shown to experience less economic volatility than their non-offending counterparts. With respect to relative performance, offending corporations were found to have lower mean economic performance measures than non-offending firms. However, offenders were found to be less volatile relative to their industry than non-offenders. The regression analysis revealed a positive relationship with the trend of profit and a negative relationship with volatility of profit, both contradict theoretical expectations. In addition, the structural variables were found to be positively related to corporate violations, but they had little mediational effect with respect to the economic variables, as hypothesized. Based on the findings of this study, the limitations and implication for an economic explanation of corporate offending are discussed. / M.S.

University of Macau / Faculty of Law