New publication: How Societal Actors Can Prevent Corporate Misconduct

In their recent publication, Dr. Max Braun and Dr. Simone Müller conduct a meta-analysis to understand the role firm external actors like investors, auditors, analysts, and the media, play in deterring corporate misconduct.

Key Findings:

• External actors can deter corporate misconduct via two distinct mechanisms: the threat of detection and the threat of sanctions. Societal actors exert a unique form of deterrence as they not only help to detect misconduct but also influence public perception of firm behavior and thus the sanctions firms and managers face.
• The proximity to the firm, the credibility of the external actor, and the attention external actors bring to firm behavior facilitate the deterrence of corporate misconduct.
• Overall, monitoring by actors outside firm boundaries plays a major role in controlling corporate misconduct. Relativist values undermine their societal role in deterring misconduct.

The paper is published in Corporate Governance: An International Review and is open access. You can access it here