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The Walls Have Ears: Local Information Environments and Corporate Fraud

Hagendorff, J.; Le, N.; Nguyen, D.D.

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Authors

J. Hagendorff

N. Le



Abstract

This paper shows that a firm's likelihood of committing corporate fraud is affected by the local information environment. We use the density of local bank branch networks as a proxy for the local information environment. We show that denser bank branch networks increase the likelihood of fraud detection, accelerate the detection of fraud, and decrease the fraud propensity of local firms. Our results cannot be explained by the clustering of firms in urban areas, geographic proximity to regulators, or other location effects. Overall, our study identifies a spatial dimension in the detection and prevention of corporate fraud.

Citation

Hagendorff, J., Le, N., & Nguyen, D. (2022). The Walls Have Ears: Local Information Environments and Corporate Fraud. Journal of Money, Credit and Banking, 54(8), 2377-2410. https://doi.org/10.1111/jmcb.12906

Journal Article Type Article
Acceptance Date Dec 7, 2020
Online Publication Date Dec 22, 2021
Publication Date 2022-12
Deposit Date Sep 9, 2021
Publicly Available Date Dec 23, 2023
Journal Journal of Money, Credit and Banking
Print ISSN 0022-2879
Electronic ISSN 1538-4616
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 54
Issue 8
Pages 2377-2410
DOI https://doi.org/10.1111/jmcb.12906
Public URL https://durham-repository.worktribe.com/output/1251029

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