This study suggests that unrelated diversification has a positive influence on the probability of fraudulent reporting whereas related diversification has a negative influence on the probability of fraudulent reporting. The strength of the influence of these corporate level strategies is contingent on the moral character of the firm. Unrelated diversification provides opportunity for financial innovation within the firm’s internal capital market, which can result in fraudulent reporting. This is more likely when the moral character (...) of the firm is driven by a conscienceless financial self-interest motive, as implied by the firm’s contempt toward the larger community (in terms of damage inflicted on the interests of people outside the firm). In contrast, related diversification, where product divisions focus on mutual sharing and monitoring of operational activities, can reduce the probability of fraudulent reporting. This is more likely when constituents within the firm view themselves as moral citizens, as implied by the firm’s benevolence toward the larger community. Hence, while unrelated diversification focuses the energies of managers within the firm on financial manipulation, related diversification focuses these energies on productive purposes. (shrink)

This paper examines fraudulent financial reporting within the context of Jones' (1991) ethical decision making model. It was hypothesized that quantitative materiality would influence judgments of the ethical acceptability of fraud, and that both materiality and financial risk would affect the likelihood of committing fraud. The results, based on a study of CPAs employed as senior executives, provide partial support for the hypotheses. Contrary to expectations, quantitative materiality did not influence ethical judgments. ANCOVA results based on participants' estimates (...) of the likelihood that a "typical CPA" would manipulate reported results indicated that both materiality and risk significantly influenced the likelihood of fraud, but that the perceived morality of the action did not. In contrast, results based on participants' self-reported behavior indicated that materiality and the perceived morality of the action would influence the likelihood of fraud, but that financial risk would not. Regardless of the measure used for the likelihood of fraud, the results indicate that financial executives continue to be influenced by quantitative materiality when misstatements are clearly material on qualitative grounds. (shrink)

In response to numerous recent cases involving materially misstated financial information arising from fraudulent financial reporting, companies, auditors, and academics have increased their focus on strengthening internal controls as a means of deterring such unethical behaviors. However, prior research suggests that stronger controls may actually exacerbate the very opportunistic behavior the controls are intended to curb. The current study investigates whether the efficacy of an implemented control is conditioned on not only the strength of the control, but also (...) on how the firm frames the purpose for implementing the control. A monitoring purpose frames controls as reducing managers’ opportunities to engage in self-interested behavior, while a coordinating purpose frames controls as facilitating coordination between the firm and its managers. We posit that the efficacy of stronger controls to reduce unethical fraudulent reporting depends on the control frame. Using an experiment, this study investigates the interactive effect of control strength and control frame on managers’ fraudulent reporting decisions. As predicted, our results show that when controls are framed for monitoring purposes, stronger controls result in less fraudulent reporting than weaker controls. Conversely, when controls are framed for coordinating purposes, stronger controls result in more fraudulent reporting than weaker controls. Our results suggest that an inconsistency between the firm’s choice of the control strength and the control frame reduces the efficacy of the implemented control to curb unethical reporting behaviors. Furthermore, supplemental analysis shows that managers’ rationalization helps explain the interactive effect of control strength and communicated control purpose on fraudulent reporting. (shrink)

Motivated by the disproportionately high incidence of fraudulent financial reporting in the IT sector where technological capability is a major source of competitive advantage, this study investigates the possible relationship between technological capability and fraud probability in the IT sector. Technological capability is measured by a firm’s technical efficiency relative to peers in transforming cumulative R&D resources into innovative output, which is a source of competitive advantage, according to the resource-based view of the firm. Technical efficiency is estimated (...) via data envelopment analysis. A sample of fraud firms taken from Accounting and Auditing Enforcement Releases is matched with control samples of non-fraud firms. Consistent with the RBV, technological capability is found to have a negative and economically significant effect on fraud probability. Moreover, fraud probability is insignificantly associated with the scale efficiency of innovative activities, as investment in R&D resources per se is not a source of sustainable competitive advantage. (shrink)

This research applies the theory of planned behavior to corporate managers’ decision making as it relates to fraudulent financial reporting. Specifically, we conducted two studies to examine the effects of attitude, subjective norm and perceived control on managers’ decisions to violate generally accepted accounting principles (GAAP) in order to meet an earnings target and receive an annual bonus. The results suggest that the theory of planned behavior predicts whether managers’ decisions are ethical or unethical. These findings are relevant (...) to corporate leaders who seek to improve ethical work climates of organizations and to many regulators, accountants, corporate governance officials and investors. (shrink)

We report the results of a study that examines the association between gender and individuals’ intentions to report fraudulent financial reporting using non-anonymous and anonymous reporting channels. In our experimental study, we examine whether reporting intentions in response to discovering a fraudulent financial reporting act are associated with the participants’ gender, the perpetrator’s gender, and/or the interaction between the participants’ and perpetrator’s gender. We find that female participants’ reporting intentions for an anonymous channel (...) are higher than for male participants; the fraud perpetrator’s gender and the interaction with participants’ gender were not significantly associated with anonymous channel reporting intentions. Neither of the two factors nor the interaction between the two factors was associated with reporting intentions to a non- anonymous reporting channel. Results from an additional analysis indicate that male and female participants differ in the extent to which they judge the reduction in personal costs of an anonymous reporting channel compared to a non-anonymous reporting channel and that the reduction in personal costs mediates the relationship between participant gender and anonymous reporting intentions. (shrink)

In three studies, factors influencing the incidence of fraudulent financial reporting were assessed. We examined (1) the effects of personal values and (2) codes of corporate conduct, on whether managers misrepresented financial reports. In these studies, executives and controllers were asked to respond to hypothetical situations involving fraudulent financial reporting procedures. The occurrence of fraudulent reporting was found to be high; however, neither personal values, codes of conduct, nor the interaction of the two factors (...) played a significant role in fraudulent financial reporting. (shrink)

This study adapts the theory of reasoned action (Ajzen and Fishbein, 1980) to the behavior of fraudulent reporting on financial statements so as to examine the effects of moral reasoning and self-monitoring on intention to report fraudulently, using structural equation modeling. The paper seeks to investigate two of the red flags for financial statement fraud identified in Loebbecke et al.'s (1989) paper: client management displays a significant lack of moral fiber and client personnel exhibit strong personality anomalies. As (...) expected, high moral reasoners are more influenced than low moral reasoners by their own attitude towards the behavior. Contrary to prior research, low self-monitors are found to be more influenced than high self-monitors by subjective norms. Future research is recommended to investigate the counter-intuitive results for self-monitors, to consider the implications of group decision making as regards the promulgation of fraudulent financial statements, and to examine additional red flags for financial statement fraud. (shrink)

Qualitative fieldwork research on sensitive topics sometimes requires that interviewees be granted confidentiality and anonymity. When qualitative researchers later publish their findings, they must ensure that any statements obtained during fieldwork interviews cannot be traced back to the interviewees. Given these protections to interviewees, the integrity of the published findings cannot usually be verified or replicated by third parties, and the scholarly community must trust the word of qualitative researchers when they publish their results. This trust is fundamentally abused, however, (...) when researchers publish articles reporting qualitative fieldwork data that they never collected. Using only publicly available information, I argue that a 2017 article in an Elsevier foreign policy and international relations journal presents anonymised fieldwork interviews that could not have occurred as described. As an exercise in post-publication peer review (PPPR), this paper examines the evidence that calls into question the reliability of the putative fieldwork quotations. I show further that the 2017 article is not a unique case. The anonymity and confidentiality protections common in some areas of research create an ethical problem: the protections necessary for obtaining research data can be used as a cover to hide substandard research practices as well as research misconduct. (shrink)

Fraudulent financial reporting, financial statements with errors so material as to require restatement, and biased reporting marred by defects such as managed earnings have plagued financial reporting in many countries in recent years. All of those failures are ethics failures that represent breaches of fiduciary duties by individuals who accepted responsibilities but did not fulfill them. The financial reporting system practiced in America is viewed by the parties involved in it as generally satisfactory. However, according (...) to another view, the interests of those primarily and secondarily responsible for those reports conflict with the interests of the intended beneficiaries, or users, of the corporate financial statements. A more realistic view of the actual operation of that reporting system shows that it is fundamentally flawed. Primary responsibility for failures rests with top management and financial management of the reporting corporation who are so strongly motivated to render favorable reports on their stewardship that they neglect their fiduciary responsibilities to investors. Secondary responsibility falls on independent auditors who are so heavily influenced by enterprise management that they, too, fail in carrying out their responsibilities to users of the audited financial statements. Ethics compromises are also found in the performances of academic accountants and members of accounting standards-setting bodies. The conflict between managements interest in reporting its performance in a favorable light and investors interest in decision-useful financial information will always exist and require regulation. However, changes in those regulations and in the basic governance arrangements involving shareholders, management, and auditors could reduce the opportunities and temptations for failures in carrying out fiduciary responsibilities. Most importantly, the close relationships between auditors and management must be loosened in favor of closer relationships between auditors and investors. (shrink)

The Sarbanes–Oxley Act of 2002 requires company executives to certify financial statements and internal controls as a means of reducing fraud. Many companies have operationalized this by instituting a sub-certification process and requiring lower-level managers to sign certification statements. These lower-level organizational members are often the individuals who are aware of fraud and are in the best position to provide information on the fraudulent act. However, the sub-certification process may have the effect of reducing employees’ intentions to report wrongdoing. (...) We suggest that subordinates with knowledge of a superior who committed a fraudulent act and certified that there is no fraud will feel less personal responsibility to report the act, thus, decreasing reporting intentions. Additionally, we suggest that if the fraud is discovered subsequent to the reports being filed with the Securities and Exchange Commission, employees will perceive lower management responsiveness to investigate the fraud, which will reduce intentions to report. Using an experimental approach, we manipulate two between-participant variables: the presence or absence of sub-certification by the transgressor and the timing of fraud discovery, either before or after the reports have been filed with the SEC. We find that when sub-certification is present, perceived personal responsibility and intentions to report were diminished compared to when sub-certification is absent. Timing of the discovery of the fraudulent act did not influence perceived management responsiveness or reporting intentions. Supplemental analysis shows that personal responsibility partially mediates the relationship between sub-certification and reporting intentions. Our findings suggest that audit committees and senior executives may want to carefully consider the costs and benefits of the sub-certification process. (shrink)

We investigate the relationship between the dark triad personality traits (Machiavellianism, narcissism, and psychopathy) of managers and the practice of reporting manipulation using a primary survey of 837 professionals working in accounting and finance departments. We find that (a) managers who exhibit dark personality traits are associated with a higher prevalence of fraudulent accounting practices in their accounting and finance departments and (b) traditional risk management mechanisms are only partially effective in mitigating this effect. Internal audits are effective (...) in curtailing the negative behavior of managers with dark triad traits only if these internal audits are outsourced and performed by independent external personnel but not if they are conducted by internal personnel. This suggests that managers with dark triad traits are able to manipulate other employees quite effectively. Consequently, having external personnel perform the auditing task provides a safeguard against such unethical practices and manipulation. This finding has strong practical implications, as it provides support for outsourcing internal audits rather than keeping them in-house. (shrink)

Fraudulent analysis and reporting of psychological data have the potential to contaminate the scientific knowledge base and eventuate in the unjustified expenditure of public money and scientific effort (Koocher & Keith-Spiegel, 1998). Traditionally, the field has relied on quantitative methodologists to educate researchers in proper analysis and reporting practices, and to examine these via peer review. The field has also relied on psychologists with training or board service in ethics to establish standards and implement strategies to discourage (...) misconduct. However, this division of responsibility for examination, standard setting, and deterrence is shown to compromise the effectiveness of methodologists' and ethicists' respective gatekeeping efforts. Methodologically and ethically trained specialists instead need to coordinate efforts to safeguard analysis and reporting procedures. Researchers also need to increase self-monitoring. Potential obstacles to achieving these ends are considered, and three tactics are proposed to overcome them. (shrink)

Objective: To determine if the medical record might overestimate the quality of care through false, and potentially unethical, documentation by physicians.Design: Prospective trial comparing two methods for measuring the quality of care for four common outpatient conditions: structured reports by standardised patients who presented unannounced to the physicians’ clinics, and abstraction of the medical records generated during these visits.Setting: The general medicine clinics of two veterans affairs medical centres.Participants: Twenty randomly selected physicians from among eligible second and third year internal (...) medicine residents and attending physicians.Main measurements: Explicit criteria were used to score the medical records of physicians and the reports of SPs generated during 160 visits . Individual scoring items were categorised into four domains of clinical performance: history, physical examination, treatment, and diagnosis. To determine the false positive rate, physician entries were classified as false positive , false negative, true positive, and true negative.Results: False positives were identified in the medical record for 6.4% of measured items. The false positive rate was higher for physical examination and diagnosis than for history and treatment . For individual physician subjects, the false positive rate ranged from 0.098 to 0.397.Conclusions: These data indicate that the medical record falsely overestimates the quality of important dimensions of care such as the physical examination. Though it is doubtful that most subjects in our study participated in regular, intentional falsification, we cannot exclude the possibility that false positives were in some instances intentional, and therefore fraudulent, misrepresentations. Further research is needed to explore the questions raised but incompletely answered by this research. (shrink)

Purpose The internet has provided a gamut of benefits to consumers. The digital world, however, also provides space for various illegal or unethical consumer activities. Consumers may not always be fully aware of the unethical or illegal nature of some of the online activities that they engage in. This study aims to examine the questionable side of online consumer behaviour in an emerging market where internet penetration and smart phone accessibility is rapidly expanding. Using a third-person technique, this study attempts (...) to empirically capture the perceptions of Indian adults regarding the prevalence of various questionable online activities such as unauthorized downloading of digital content, spreading fake news/misinformation and fraudulent returns and to understand the extent to which these respondents believe that such actions are acceptable or illegal and unethical. Design/methodology/approach An online questionnaire was used to collect primary data from 212 consumers. Non-probability convenience and snowball sampling was used for the purpose. Findings Unauthorized watching or downloading of online content is reported to be the most prevalent among the various types of questionable behaviours examined. However, it is behaviours such as fraudulent returns and spreading misinformation through online channels which are considered to be the most unethical or illegal. Certain behaviours which may be deemed to be unethical and illegal nevertheless are seen as acceptable. Significant differences between demographics in the case of several of the unethical activities are reported. Research limitations/implications This study examines the grey and dark side of online behaviours among consumers in an emerging market and points to the need for action on several fronts to increase consumer awareness and sensitivity about the unethical or illegal nature of some of their online activities and the implications for multiple stakeholders. Based on the findings of this study, recommendations directed at consumers, marketers and policymakers are discussed. Originality/value Although the benefits of online communication channels have been extensively studied, their ability to facilitate certain unethical and even illegal activities is an under-researched area. The inclination to engage in these types of questionable behaviours may have been exacerbated by the restrictions imposed by the COVID-19 pandemic. This study highlights the importance of research on various grey consumer activities in the digital space and paves the way for further investigations by identifying online actions which are considered as most prevalent and/or unethical and illegal. (shrink)

Regulatory responses to the business failures of 1998–2001 framed them as a general failure of governance and ethics rather than as firm-specific problems. Among the regulatory responses are Section 406 of Sarbanes–Oxley Act, SEC, and exchange requirements to provide a Code of Ethics. However, institutional pressures surrounding this regulation suggest the potential for symbolic responses and decoupling of response from organizational action. In this article, we examine Codes of Ethics for a stratified sample of 75 U.S. firms across five distinct (...) industries and find that content and language converge across organizations in ways undesired by the regulators, and that language is used to minimize the effects of the Code on constraining organizational behavior. There is, however, a noteworthy exception in the sections of the Codes dedicated the ethics of financial reporting. Although this material still contains legalistic boilerplate information, it does offer concrete guidance and emphatic language pertaining to the need to maintain the integrity of reporting practices. This suggests that the corporate understanding of the source of the failures is one of fraudulent financial reporting. Aside from the matter of financial reporting, the vague and stylized content of the Codes was a predicted response and constitutes a rational response to the regulation. The regulation, however, clearly states the belief that Codes should vary from firm to firm and that individual firms should determine the specific content of a Code. Aside from financial reporting matters, the observed result suggests that regulatory efforts may have failed to instigate corporate change in attitudes toward and enforcement of higher ethical standards by corporate actors. (shrink)

This paper presents a comparative analysis of three American and three European corporate failures. The first part of the analysis is based on a theoretical framework including six areas of ethical climate; tone at the top; bubble economy and market pressure; fraudulent financial reporting; accountability, control, auditing, and governance; and management compensation. The second and third parts consider the analysis of these cases from fraud perspective and in terms of firm-specific characteristics and environmental context. The research analyses shed (...) light on the fact that, despite major differences between Europe and U.S. in terms of political institutions, laws and regulations as well as managerial practices, there are significant similarities between six groups. The analysis also demonstrates that, the ethical dilemma has been coupled with ineffective boards, inefficient corporate governance and control mechanisms, distorted incentive schemes, accounting irregularities, failure of auditors, dominant CEOs, dysfunctional management behavior and the lack of a sound ethical tone at the top. Significant similarities were also observed in the analysis from the fraud triangle perspective. However, there are several major differences between the six corporate failure cases particularly with regard to ownership structure, coverage in media, and legal, regulatory and governance frameworks. This research study may have several academic and practical contributions, particularly because of multidisciplinary, international features, and comparative analyses used in the paper. (shrink)

The rising tide of corporate scandals and audit failures has shocked the public, and the integrity of auditors is being increasingly questioned. It is crucial for auditors and regulators to understand the main causes of audit failure and devise preventive measures accordingly. This study analyzes enforcement actions issued by the China Securities Regulatory Commission against auditors in respect of fraudulent financial reporting committed by listed companies in China. We find that auditors are more likely to be sanctioned by (...) the regulators for failing to detect and report material misstatement frauds rather than disclosure frauds. Further analysis of the material misstatements indicates that auditors are more likely to be sanctioned for failing to detect and report revenue-related frauds rather than assets-related frauds. In sum, our results suggest that regulators believe auditors have the responsibility to detect and report frauds that are egregious, transaction-based, and related to accounting earnings. The results contribute to our knowledge of auditors’ responsibilities for detecting frauds as perceived by regulators. (shrink)

Background Papers retracted for fraud (data fabrication or data falsification) may represent a deliberate effort to deceive, a motivation fundamentally different from papers retracted for error. It is hypothesised that fraudulent authors target journals with a high impact factor (IF), have other fraudulent publications, diffuse responsibility across many co-authors, delay retracting fraudulent papers and publish from countries with a weak research infrastructure. Methods All 788 English language research papers retracted from the PubMed database between 2000 and 2010 (...) were evaluated. Data pertinent to each retracted paper were abstracted from the paper and the reasons for retraction were derived from the retraction notice and dichotomised as fraud or error. Data for each retracted article were entered in an Excel spreadsheet for analysis. Results Journal IF was higher for fraudulent papers (p<0.001). Roughly 53% of fraudulent papers were written by a first author who had written other retracted papers (‘repeat offender’), whereas only 18% of erroneous papers were written by a repeat offender (χ=88.40; p<0.0001). Fraudulent papers had more authors (p<0.001) and were retracted more slowly than erroneous papers (p<0.005). Surprisingly, there was significantly more fraud than error among retracted papers from the USA (χ2=8.71; p<0.05) compared with the rest of the world. Conclusions This study reports evidence consistent with the ‘deliberate fraud’ hypothesis. The results suggest that papers retracted because of data fabrication or falsification represent a calculated effort to deceive. It is inferred that such behaviour is neither naïve, feckless nor inadvertent. (shrink)

Scientific authorship serves to identify and acknowledge individuals who “contribute significantly” to published research. However, specific authorship norms and practices often differ within and across disciplines, labs, and cultures. As a consequence, authorship disagreements are commonplace in team research. This study aims to better understand the prevalence of authorship disagreements, those factors that may lead to disagreements, as well as the extent and nature of resulting misbehavior. Methods include an international online survey of researchers who had published from 2011 to (...) 2015. Of the 6673 who completed the main questions pertaining to authorship disagreement and misbehavior, nearly half reported disagreements regarding authorship naming; and discipline, rank, and gender had significant effects on disagreement rates. Paradoxically, researchers in multidisciplinary teams that typically reflect a range of norms and values, were less likely to have faced disagreements regarding authorship. Respondents reported having witnessed a wide range of misbehavior including: instances of hostility, undermining of a colleague’s work during meetings/talks, cutting corners on research, sabotaging a colleague’s research, or producing fraudulent work to be more competitive. These findings suggest that authorship disputes may contribute to an unhealthy competitive dynamic that can undermine researchers’ wellbeing, team cohesion, and scientific integrity. (shrink)

Contract cheating is currently one of the most serious academic integrity issues around the globe. Numerous studies have been conducted, mostly in English speaking countries. So far, no such research has been conducted in Czechia, and consequently there have been no specific data available on Czech students’ fraudulent behaviour. For this study, we created a questionnaire to obtain primary data on student usage of essay mills and their self-reported exposure to contract cheating. The questionnaire focused on students and graduates (...) of Czech universities and collected a total of 1016. Of that number, 8% of respondents admit having engaged in contract cheating. The questionnaire responses yielded useful information and insight into students’ attitudes regarding contract cheating and the extent of this phenomenon in Czechia. We now know more about their reasons for contract cheating and have insight into their thoughts regarding possible discovery. (shrink)

I examine how particular social arrangements and incentive structures encourage the honest reporting of experimental results and minimize fraudulent scientific work. In particular I investigate how epistemic communities can achieve this goal by promoting members to police the community. Using some basic tools from game theory, I explore a simple model in which scientists both conduct research and have the option of investigating the findings of their peers. I find that this system of peer policing can in many (...) cases ensure high levels of honesty. (shrink)

This study investigates whether firms with fraudulent financial reporting time their earnings announcements strategically and finds that fraudulent firms are more likely to disclose their earnings in the after-market hours during their fraud periods to postpone fraud detection. Cross-sectional tests show that firms with lower visibility are more likely to adopt and benefit from this timing strategy. In addition, fraudulent firms are found to time their conference calls strategically and package their earning news with forecasts to (...) flood the market with information and lower the fraud detection rate. Results also show that unethical managers may benefit from insider trading when their firms use a timing strategy to lower the detection rate. This study sheds light on a potential strategy that unethical managers may adopt to camouflage their fraudulent financial reporting. These results are robust to a variety of settings of samples and model specifications. (shrink)

The main varieties of scientific misconduct are fabrication, falsification, misquoting and plagiarism. Considering the "improvement" of fraudulent skills, scientists, editors, and authorities must jointly combat the misconduct. Also, it is important that whistleblowers must be protected from revenge. The response to scientific misconduct requires national and international bodies to provide leadership and guidelines. Whistleblowers need a safe, confidential place to report misconduct. The quality of research and hidden conflicts of interest should be taken into account deciding which studies are (...) to be included into reviews. Forged publications and speculative theories have been used for promotion of drugs, dietary supplements and treatments without proven effectiveness. Marketing of placebos in the guise of evidence-based medications seems to be on the increase. Patients can be misinformed not only by the advertising but also by publications supposed to be scientific. Furthermore, it has become usual practice to disregard published criticism in spite of personal communications and debates at conferences. Some scientists seem to make use of critical comments without citing them, or just continue publications ignoring the criticism. The same scientists continue working sometimes in cooperation with renowned researchers; and it is possible that some later articles are more reliable than earlier ones. However, it is insufficient to hope that reliable publications would be shortly confirmed while forgeries would fall into oblivion. Fake papers are misleading for research and practice, cost time and money. Wrong concepts are persisting and reappearing, which may result in useless experimentation and application of invasive methods without sufficient indications. An international cooperation of bona fide scientists, editors and authorities is needed to eradicate the scientific misconduct and fraude in medicine. The book contains an overview of misconduct in medical research and practice mainly from the former Soviet Union. Ample documentary evidence is provided as illustrations. (shrink)

In response to calls for more research on how to prevent or detect fraud (ACAP, Final Report of the Advisory Committee on the Auditing Profession, United States Department of the Treasury, Washington, DC, 2008 ; AICPA, SAS No. 99: Consideration of Fraud in a Financial Statement Audit, New York, NY, 2002 ; Carcello et al., Working Paper, University of Tennessee, Bentley University and Kennesaw State University, 2008 ; Wells, Journal of Accountancy, 2004 ), we develop a framework that identifies three (...) psychological pathways to fraud, supported by multiple theories relating to moral intuition and disengagement, rationalization, and the role played by negative affect. The purpose of developing the framework is twofold: (1) to draw attention to important yet under-researched aspects of ethical decision-making, and (2) to increase our understanding of the psychology of committing fraud. Our framework builds on the existing fraud triangle (PCAOB, Consideration of fraud in a financial statement audit. AU Section 316, www.pcaobus.org , 2005 ) which is used by auditors to assess fraud risk. The fraud triangle is composed of three factors that, together, predict the likelihood of fraud within an organization: opportunity, incentive/pressure, and attitude/rationalization. We find that, when faced with the opportunity and incentive/pressure, there are three psychological pathways to fraud nestled within attitude/rationalization: (1) lack of awareness, (2) intuition coupled with rationalization, and (3) reasoning. These distinctions are important for fraud prevention because each of these paths is driven by a different psychological mechanism. This framework is useful in a number of ways. First, it identifies certain insidious situational factors in which individuals commit fraud without recognizing it. Second, it extends our knowledge of rationalization by theorizing that individuals use rationalization to avoid or reduce the negative affect that accompanies performing an unethical behavior. Negative affect is important because individuals wish to avoid it. Third, it identifies several other methods fraudsters use to reduce negative affect, each of which could serve as potential “psychological red flags” and helps predict future fraudulent behavior. Finally, our framework can be used as a theoretical foundation to explore several interventions designed to prevent fraud. (shrink)

Using two experiments, I examine how apologizing for fraud influences investor's avoidance and revenge behavior. Investors in experiment one report how many shares they would sell and how likely they would be to pursue legal punishment after discovering fraud has occurred in an organization they are currently invested in and subsequently reading about management's response to the fraud. I manipulate the nature of fraud as fraudulent financial reporting or asset misappropriation. I also manipulate whether management apologizes, scapegoats responsibility, (...) or remains silent after the fraud. Results show avoidance and revenge behavior is more negative after misreporting fraud. Data suggest that this difference may be partially attributable to the underlying moral norm that is violated. Specifically, misreporting is primarily a moral violation of deception, whereas embezzlement is primarily a moral violation of stealing. Results also show differential investor reactions depending on the type of fraud and management's response. For misreporting, revenge behavior is higher when management apologizes, but there is no effect on avoidance behavior. For embezzlement, avoidance behavior is reduced when the organization apologizes, but revenge behavior is unaffected. In experiment two, I replicate the misreporting condition from experiment one and manipulate apology sincerity. Results show that apology sincerity is positively associated with revenge behavior. Results of these two experiments extend both accounting and trust repair research by emphasizing the importance of disentangling moral integrity-based trust violations and that the adage of "just say you're sorry" is helpful in some situations and harmful in others. (shrink)

This study is the first to examine the relationships among Machiavellianism, social norms and taxpayer intentions to fraudulently overstate their deductions. We theorize and empirically document that high Machiavellian taxpayers report significantly less ethical social norms, suggesting that reported social norms are influenced by cognitive biases such as social projection and Machiavellian cynicism; reported social norms are, in general, significantly associated with tax evasion intentions; social norms partially mediate the relationship between Machiavellianism and evasion intentions. Our findings imply that experimental (...) research that controls for key personality traits such as Machiavellianism will be necessary to test the effectiveness of potential interventions designed to enhance social norms and tax compliance. Our findings also raise questions regarding the validity of certain social norm measures used in recent studies, particularly in the case of high Machiavellians. In contrast to much prior research, gender was not associated with the likelihood of committing tax fraud in our multivariate models, suggesting that the higher levels of tax compliance often associated with females may be eroding. (shrink)

In recent years, there has been much discussion over how to assure scientific integrity. It has become clear that a few scientists have fraudulently collected or reported data, conducted harmful or unethical experiments, or practiced “unscientific” procedure. What are regulative bodies to do? The approach has been to define research misconduct and then use that definition to assess scientific practice.[1] But just how to define research misconduct and hence, regulate the conduct of scientists in research? The debate that resulted in (...) response to this question, and that led ultimately to the new federal definition (42CFR50), has both theoretical and political underpinnings. The political underpinnings have been greatly discussed. But the theoretical underpinnings (and their connection to the political) have not. To give a definition of “good” versus “bad” science requires some understanding of the scientific process itself. So theoretical ideas about what constitutes good or bad science—ideas that influence and help shape our ideas and applications of research misconduct definitions—have political implications for the regulation of science. However, as the debates within both the scientific and philosophical communities have made clear, there are significant limits to any appropriate legislation of what counts as “good” science. A definition of research misconduct (or “bad” science) that spells out the nature of science too stringently may stifle scientific innovation. Consider the case of sociobiology when it was first introduced in the 1970’s. The idea is to account for social behavior of various species (including Homo sapiens) in terms of evolutionary biology. To take one example from sociobiology, the greater tendency of males toward rape is to be explained in terms of the evolutionary advantage for the male’s genes. Not surprisingly, sociobiology met with great controversy; some considered it an inappropriate application of biological principles to the social-interpretive-human domain. Still, few did or would suggest that it is the province of any regulatory body to silence the advocates of the new field. We will endorse and reinforce the standard arguments that the scientific process is too complicated to provide mechanical rules of conduct.. (shrink)

The essays in this volume were written when John Henry Newman was a Fellow of Oriel College, Oxford. He wrote the first, on biblical miracles "The Miracles of Scripture," in 1825-26, as a relatively young man; the other, "The Miracles of Early Ecclesiastical History," was written in 1842-43. A comparison of the two essays displays a shift in Newman's theological stances. In the earlier essay, Newman argues in accordance with the theology of evidence of his time, maintaining that the age (...) of miracles was limited to those recorded in the Old Testament scriptures and in the Gospels and Acts. He asserts that biblical miracles served to demonstrate the divine inspiration of biblical revelation and to attest to the divinity of Christ. However, with the end of the apostolic age, the age of miracles came to an end; miracles reported from the early ages of the Church Newman dismissed as suspicious and possibly fraudulent. With this view, Newman entered into an ongoing debate between the skepticism of Hume and Paine and its continuation in the utilitarianism of Bentham, on the one hand, and the views of Christian apologists rebutting Hume's arguments, on the other. In "The Miracles of Early Ecclesiastical History," Newman can be seen as coming closer to accepting the doctrines of the Catholic Church. He rejects the stance he took in "The Miracles of Scripture," now arguing for a continuity of sacred history between the biblical and ecclesiastical periods. He had clearly abandoned the position of "evidence theologians" that miracles ended after the time of the Apostles. Newman's movement between the writing of the two essays is essentially a growing into a deeper awareness of the Church as a divine society in whose life miracles and supernatural gifts were to be expected. (shrink)

This study investigates how managers in firms that have committed fraud strategically use socially responsible activities in coordination with their fraudulent financial reporting practices. Using propensity score matching to select control firms that have a similar probability of fraud in the pre-fraud benchmark period, we find that the corporate social responsibility performance of fraudulent firms in the fraud-committing period is significantly higher compared with the CSR performance of non-fraudulent control firms during this period, and compared with (...) that during their own pre-fraud benchmark periods. This higher CSR performance by fraudulent firms is achieved by means of investing in both stakeholder and third-party CSR categories and by improving in CSR strengths. Furthermore, the increase in CSR performance is more pronounced for fraudulent firms with a weak governance environment, and for firms located in high-religiosity states. Overall, our findings suggest that fraudulent firms strategically adjust their CSR performance to coordinate with their fraudulent financial activities. (shrink)

Regulators have recently relaxed some provisions of the Global Research Analyst Settlement of 2003 and associated reforms, which arose from charges that conflicts of interest within investment banks had induced the issuance of fraudulent or otherwise misleading analyst research reports. We examine the effectiveness of the Global Settlement in reducing the systematic optimism observed in stock recommendations of analysts whose employer is a merger and acquisition advisor for the covered firm, by comparing the optimism exhibited in stock recommendations issued (...) by these analysts and by unaffiliated analysts before and after the Global Settlement. To control for the impact on analyst optimism of other time varying factors, our sample includes cases from the US and from other countries in which the Global Settlement had no direct impact. We argue that if the Global Settlement was effective, there should be a reduction in the relative optimism of affiliated analysts following this reform, and that reduction in the relative optimism should be greater for affiliated US analysts, than for affiliated analysts from non-US countries. When optimism is measured over a 180-day period surrounding the M&A announcement, we find a significantly greater reduction in US affiliated analysts’ optimism than occurs outside the US. However, evidence regarding analysts’ optimism in the 90-day period prior to the announcement of an M&A deal is mixed. (shrink)

Corporate governance scholarship focuses on executive malfeasance, specifically its antecedents and consequences. Academic efforts primarily focus on prevention while practitioners are often left to hold firms and executives (including directors) accountable through a variety of sanctions. Even so, executive malfea­sance still occurs even in the face of the vast resources used to monitor, control, and penalize firms and executives. In this paper, we posit equity markets do not adequately penalize firms for inaccurate earnings reports. Using a sample of 129 firms (...) identified by the U.S. General Accounting Office for reporting fraudulent earnings in 10K filings, we found support for our assertion. Consequently, the one party who may benefit but escape accountability is firm shareholders. Moreover, we find little empirical evidence that the subset of firms sanctioned by the SEC is penalized more heavily than the full sample by markets at the time they report and correct their 10K filings. Our results raise serious questions whether such mana­gerial opportunism can be eradicated given the apparent lack of consequences in equity markets for investors. We also question whether the SEC is able to discern between fraud and error in financial reporting and its implications. (shrink)

The purpose of retracting published papers is to maintain the integrity of academic research. Recent work in research ethics has devoted important attention to how to improve the system of paper retraction. In this context, the focus has primarily been on how to handle fraudulent or flawed research papers and how to encourage the retraction of papers based on honest mistakes. Less attention has been paid to whether papers that report unethical research—for example, research performed without appropriate concern for (...) the moral rights and interests of the research participants—should be retracted. The aim of this paper is to examine to what extent retraction policies of academic journals and publishers address retractions of unethical research and to discuss critically various policy options and the reasons for accepting them. The paper starts by reviewing retraction policies of academic publishers. The results show that many journals do not have explicit policies for how to handle unethical research. Against this background, we then discuss four normative arguments for why unethical research should be retracted. In conclusion, we suggest a retraction policy in light of our empirical and normative investigations. (shrink)

Can exposure to media portrayals of human violence impact an individual’s ethical decision making at work? Ethical business failures can result in enormous financial losses to individuals, businesses, and society. We study how exposure to human violence—especially through media—can cause individuals to make less ethical decisions. We present three experiments, each showing a causal link between exposure to human violence and unethical business behavior, and show this relationship is mediated by an increase in individual hostility levels as a result of (...) exposure to violence. Using observational data, we then provide evidence suggesting that this relationship extends beyond the context of our experiments, showing that companies headquartered in locations marked by greater human violence are more likely to fraudulently misstate their financial statements and exhibit more aggressive financial reporting. Combined, our results suggest that exposure to human violence has significant and real effects on an individual’s ethical decision making. (shrink)

Journals are failing in their obligation to ensure that research is fairly represented to their readers, and must act decisively to retract fraudulent publications. Recent case reports have exposed how marketing objectives usurped scientific testing and compromised the credibility of academic medicine. But scant attention has been given to the role that journals play in this process, especially when evidence of research fraud fails to elicit corrective measures. Our experience with The Journal of the American Academy of Child and (...) Adolescent Psychiatry (JAACAP) illustrates the nature of the problem. The now-infamous Study 329 of paroxetine in adolescent depression was negative for efficacy on all eight protocol-specified outcomes and positive for harm, but JAACAP published a report of this study that concluded that “paroxetine is generally well tolerated and effective for major depression in adolescents.” The journal’s editors not only failed to exercise critical judgment in accepting the paper, but when shown evidence that the paper misrepresented the science, refused either to convey this information to the medical community or to retract the article. (shrink)

This issue of the Journal contains the material on physical mediumship originally scheduled for the Spring JSE. The plan for that issue had been to focus on the Felix Experimental Group (FEG) and its medium Kai Mügge, and Michael Nahm and I had each written very long papers describing and evaluating our detailed and extensive investigations of the group. But as I mentioned in my Editorial in the last issue, JSE 28:1 (Spring 2014), as we were preparing to send the (...) Spring issue to the printers, convincing evidence of fraud surfaced in the case, and the current issue now contains substantial revisions of those two long papers, reflecting what Nahm and I have learned and concluded in the interim. But first, since some (maybe many) JSE readers lack the background to put these contemporary investigations of physical mediumship into context, a few words on the subject are perhaps in order. As regular readers of our Historical Perspectives papers will know, physical mediumship flourished during a roughly 80-year period beginning in the mid-nineteenth century. The widespread emergence of physical mediums corresponded to the beginning, and then the heyday, of the Spiritualist movement, which began in the United States in the 1850s, and spread quickly to Europe. Spiritualism in the West fostered a more secular spiritism-the view that personal consciousness persists after bodily death, and that although some people are especially gifted mediumistically the rest of humanity can also experience a direct connection to "the other side." While mental mediums claimed to deliver messages from the deceased, say through automatic writing or trance impersonations, physical mediums purported to provide evidence of survival in various physical forms. The most common of these were "raps" or knocking sounds, either in the séance table or elsewhere in the room, typically answering "yes" or "no" questions by the number of sounds (e.g., two for "yes" and three for "no"). Sometimes, instead of raps, the séance table would tilt up and down several times, and in more dramatic cases the table would levitate fully. And in the most dramatic of those cases, sitters would report that the table carried people up and around the room with them, and many reported that they were unable to move the levitated table back to the floor once it was aloft. More dramatically still, many mediums purported to materialize objects resembling the deceased-for example, a disembodied hand and wrist (perhaps with characteristic deformations), or an image of the deceased's face, or a full-figure materialized human form. Although most spiritists insisted throughout that these physical phenomena were manifestations of the deceased mediated by the living, many investigators entertained and then gradually accepted the view that the carefully controlled (and presumably non-fraudulent) phenomena were actually psychokinetic productions of the living. Undoubtedly, many factors contributed to the decline of the Spiritualist movement and the apparent retreat of physical mediums to relatively inconspicuous enclaves or sitter groups. Not surprisingly, one of those is the richly documented history of mediumistic fraud perpetrated by soundrels only too willing to take advantage of grieving and gullible sitters. Nevertheless, and contrary to what many like to claim, it would be a mistake to think either that all physical mediums were frauds or that nobody managed to weed out the charlatans among them. First of all, investigators exposed many hundreds of fraudulent mediums during the late nineteenth and early twentieth centuries. Some of those investigators were self-styled skeptical debunkers-scientists or laypersons who made reputations for themselves by exposing mediumistic duplicity, and most of whom believed that spiritualistic phenomena simply couldn't be genuine. But others combined careful and critical research with a sympathetic or at least open-minded attitude toward the paranormal. One of the reasons this period is so important is that some physical mediums clearly stood out from the crowd. No matter how carefully they were controlled, and no matter how alert, competent, and familiar with conjuring were their investigators, these mediums produced effects that couldn't plausibly be dismissed as fraudulent or attributed to malobservation. In fact, one of the strongest bodies of evidence comes from the 1908 Naples sittings with Eusapia Palladino. Eusapia's three investigators were England's most experienced debunkers of fraudulent mediums. They knew the tricks of the trade (indeed, two of them were skilled conjurors); they knew what Eusapia's sometimes suspicious methods (and occasionally outright but simplistic tricks) were; they knew how to control for them; and the phenomena occurred in decent electric light and often at a distance from the medium. The investigators traveled to Naples believing they would establish once and for all that Eusapia was nothing but a trickster, and they left Naples grudgingly convinced that the nearly 500 phenomena they documented over eleven séances were not fraudulent. (shrink)

In the Summer 2014 JSE issue (Volume 28:2), we published two long reports, by Michael Nahm and myself, on the investigation of physical medium Kai Mügge and the Felix Circle. Those papers were revised versions of papers, ready to be published earlier, but scuttled when evidence of fraud was uncovered in the case. Nahm and I reached different conclusions about Kai’s mediumship as a whole. He felt that the majority of Kai’s phenomena were probably fraudulent. I was not ready (...) to go that far. In any case, whatever our intuitions might have been about the extent of Kai’s cheating, we both agreed that some of his phenomena were still very difficult to explain away—and indeed had not been adequately explained away. I believe it’s fair to say that however large or small that residue of legitimacy may be, Nahm and I agree that it at least includes table levitations. Since that JSE issue was published, there have been further developments in the case. Some of these, from an investigation I supervised in October of this year, I hope to present at length in a future issue of the JSE. The rest concern some incidents that occurred relatively soon after the appearance of our original reports, and which should be mentioned now without further ado. The item of greatest interest, no doubt, will be the testimony—quoted below—describing how at least one instance of Kai’s cheating was uncovered. (shrink)

Through the last half of the nineteenth century and the first part of the twentieth, no scientist more vigorously defended Darwinian theory than the German Ernst Haeckel (1834–1919). More people learned of the new ideas through his voluminous publications, translated into numerous languages, than through any other source, including Darwin’s own writings. He enraged many of his contemporaries, especially among the religiously orthodox; and the enmity between evolutionary theory and religious fundamentalism that still burns brightly today may in large measure (...) be attributed to Haeckel’s unremitting attacks on the ingressions of religion into science. Though he retained a life-long friendship with and the support of Darwin, some in the scientific community who were critical of evolutionary theory—Emil Du Bois-Reymond, Rudolf Virchow, and Louis Agassiz, for instance—accused him of deception. That charge has been renewed in our time based on seemingly incontrovertible evidence. In a Science magazine article published in 1997, ‘‘Haeckel’s Embryos: Fraud Rediscovered,’’ Haeckel, was indicted of having intentionally misrepresented embryological development (Pennisi 1997). The article reported that the work of Michael Richardson and his colleagues demonstrated this malfeasance through a comparison of Haeckel’s illustrations of early-stage embryos with photographs of the same species at a comparable stage (see Fig. 1). The photos showed embryos of various species that differed among themselves and certainly from Haeckel’s images. The differences were striking and the implication obvious: fraudulent misrepresentation. Richardson, as quoted in the article, affirmed the charge: ‘‘It looks like it’s turning out to be one of the most famous fakes in biology’’. (shrink)

ABSTRACT:Corporate governance scholarship focuses on executive malfeasance, specifically its antecedents and consequences. Academic efforts primarily focus on prevention while practitioners are often left to hold firms and executives (including directors) accountable through a variety of sanctions. Even so, executive malfeasance still occurs even in the face of the vast resources used to monitor, control, and penalize firms and executives. In this paper, we posit equity markets do not adequately penalize firms for inaccurate earnings reports. Using a sample of 129 firms (...) identified by the U.S. General Accounting Office for reporting fraudulent earnings in 10K filings, we found support for our assertion. Consequently, the one party who may benefit but escape accountability is firm shareholders. Moreover, we find little empirical evidence that the subset of firms sanctioned by the SEC is penalized more heavily than the full sample by markets at the time they report and correct their 10K filings. Our results raise serious questions whether such managerial opportunism can be eradicated given the apparent lack of consequences in equity markets for investors. We also question whether the SEC is able to discern between fraud and error in financial reporting and its implications. (shrink)

Corporate governance scholarship focuses on executive malfeasance, specifically its antecedents and consequences. Academic efforts primarily focus on prevention while practitioners are often left to hold firms and executives (including directors) accountable through a variety of sanctions. Even so, executive malfea­sance still occurs even in the face of the vast resources used to monitor, control, and penalize firms and executives. In this paper, we posit equity markets do not adequately penalize firms for inaccurate earnings reports. Using a sample of 129 firms (...) identified by the U.S. General Accounting Office for reporting fraudulent earnings in 10K filings, we found support for our assertion. Consequently, the one party who may benefit but escape accountability is firm shareholders. Moreover, we find little empirical evidence that the subset of firms sanctioned by the SEC is penalized more heavily than the full sample by markets at the time they report and correct their 10K filings. Our results raise serious questions whether such mana­gerial opportunism can be eradicated given the apparent lack of consequences in equity markets for investors. We also question whether the SEC is able to discern between fraud and error in financial reporting and its implications. (shrink)

This article shows under which circumstances fraudulent accreditation can occur in Brazilian military hospitals, calling attention to the tone at the top as a critical aspect of military fraud deterrence – and hence as a critical aspect of this branch of military ethics. The problems allegedly found in Brazilian military health institutions were revealed through in-depth interviews conducted with 29 professionals who reported to work or have worked in a Brazilian military hospital. These fraud allegations were mostly associated with (...) false documentation and procedures designed to give the appearance that legal requirements for accreditation were met and could be traced back to a weak or corrupt “tone at the top” coming from military higher ranks. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:The Devil's Stratagem or Human Fraud:Ippolito Desideri on the Reincarnate Succession of the Dalai LamaMichael J. SweetThe institution of the Dalai Lama and the narrative of his reincarnate succession have become so familiar in the course of the past few decades as to seem almost unremarkable. But, let us imagine hearing the story of the Fourteenth Dalai Lama's succession for the first time: the prophecies of his dying predecessor, (...) the cryptic words of the state oracle, dreams, omens, a mummy turning its head and a fungus growing on a pillar (both indicating the direction of the birthplace of the new incarnation), visions in a sacred lake, and finally the discovery and recognition of a remarkable child who gives incontrovertible evidence of remembering his past life,2 followed by his enthronement and veneration as a virtual god-king—some people will take this story as a factual report, others will find it a captivating fairy tale,3 while still others would dismiss it as a sham. The process of reincarnate succession is unique to what Ippolito Desideri called "the false and most singular religious sect found in Tibet.... this hodgepodge of bizarre dogmas which make up a religious monstrosity unlike any other religion in the world that I know of,"4 and in the shock of first encounter it has appeared either miraculous, fraudulent, or diabolical to many outsiders who heard about it through the middle twentieth century, before Tibet was forcibly incorporated into China, when it could still be viewed as a remote and mysterious theocratic kingdom.5 The reception of the reincarnate succession narrative in the West, in China, and elsewhere certainly warrants a full-length treatment. Here I will focus on a small aspect of this subject, namely, how this narrative was received by one exceptional individual, the Italian Jesuit missionary Ippolito Desideri (1684–1733). In describing his understanding of reincarnate succession, applied in particular to the case of the Dalai Lama, I hope to illuminate Desideri's struggle in engaging with Tibetan Buddhism, caught as he was between acceptance and even enthusiasm for many aspects of Tibetan culture and religious life and his unswerving commitment to the faith and doctrine of the Catholic Reformation; the motive for all of his trials and labors in the Tibet mission was a burning desire to win the imperiled souls of the Tibetans for Christ. [End Page 131]Reincarnate succession has a long history in Tibet. Almost five hundred years before Desideri's sojourn, the Franciscan William of Rubruck (ca. 1220–after 1257) mentioned hearing of a boy who was less than three years old "yet was fully capable of rational thought; he said of himself that he was in his third incarnation, and he knew how to read and write."6 William, whose journey (1253–1255) to the court of the Mongol great khan Mönke occurred not very long after the institution of incarnate lamas originated in Tibet,7 was the first to introduce the figure of the infant tulku [incarnate lama] as child prodigy, which we will encounter subsequently.Aside from this one early reference, the subject truly surfaced for the first time in Athanasius Kircher's 1667 China Illustrata;8 the section dealing with Tibet was based on the account given to him by the German Jesuit Johannes Grüber, who had briefly visited Lhasa in 1661.9 Kircher's depiction of Tibet is a second- or third-hand mishmash of misinformation, fantasy, and the barest minimum of fact. The Dalai Lama is presented as a demonically inspired antipope: "He is worshiped like a divinity... They kiss his feet with incredible veneration, as if he were the Pope... by this the deceitfulness of the evil spirit is wondrously shown, for the veneration due only to... the Pope of Rome is transferred to the heathen worship of savage nations, like all the other mysteries of Christianity."10 Kircher here resorts to the principle of diabolical plagiarism, originating in early Christian apologetics, to explain the perceived resemblances of Tibetan practices and institutions to those of Roman Catholicism.11 However, he regarded the Dalai Lama's succession as a purely human deception in which a... (shrink)

William Lawrence Tower’s work on the evolution of the Colorado Potato Beetle (_Leptinotarsa decemlineata_), documenting the environmental induction of mutation and speciation, made him a leading figure in experimental genetics during the first decade of the 20th century. His research program served as a model for other experimental evolution studies seeking to demonstrate the environmental modification of inheritance. Tower enjoyed the support of influential figures in the field, despite well-known problems that plagued Tower’s earlier academic career. The validity of his (...) genetic work, and other findings reported by Tower, were later challenged. The Tower affair illustrates how questionable and possibly fraudulent scientific practices can be tolerated to explore certain experimental directions and theoretical frameworks, particularly at the frontier of expanding disciplines. When needed, those explorations can be forestalled or extinguished by exploiting conspicuous vulnerabilities of rogue practitioners. In Tower’s case, both unrefuted allegations of scientific misconduct and personal problems dissolved his institutional support, leading to a swift ouster from academic science. Tower’s downfall discredited soft inheritance and neo-Lamarckian conceptions in the field of experimental genetics, facilitating the discipline’s embrace of a hard inheritance model that featured a hereditary material resistant to environmental modification. (shrink)

Peer review process helps in evaluating and validating of research that is published in the journals. U.S. Office of Research Integrity reported that data fraudulence was found to be involved in 94% cases of misconduct from 228 identified articles between 1994–2012. If fraud in published article are significantly as high as reported, the question arise in mind, were these articles peer reviewed? Another report said that the reviewers failed to detect 16 cases of fabricated article of Jan Hendrick Schon. Superficial (...) peer reviewing process does not reveals suspicion of misconduct. Lack of knowledge of systemic review process not only demolish the academic integrity in publication but also loss the trust of the people of the institution, the nation, and the world. The aim of this review article is to aware stakeholders specially novice reviewers about the peer review system. Beginners will understand how to review an article and they can justify better action choices in dealing with reviewing an article. (shrink)

Scientific misconduct obstructs the advance of knowledge in science. Its impact in some disciplines is still poorly known, as is the frequency in which it is detected. Here, I examine how frequently editors of ecology and evolution journals detect scientist misconduct. On average, editors managed 0.114 allegations of misconduct per year. Editors considered 6 of 14 allegations (42.9%) to be true, but only in 2 cases were the authors declared guilty, the remaining being dropped for lack of proof. The annual (...) rate of allegations that were probably warranted was 0.053, although the rate of demonstrated misconduct was 0.018, while the rate of false or erroneous allegations was 0.024. Considering that several cases of misconduct are probably not reported, these findings suggest that editors detect less than one-third of all fraudulent papers. (shrink)

Fraud in the reward-based crowdfunding market has been of concern to regulators, but it is arguably of greater importance to the nascent industry itself. Despite its significance for entrepreneurial finance, our knowledge of the occurrence, determinants, and consequences of fraud in this market, as well as the implications for the business ethics literature, remain limited. In this study, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010 through 2015. We then follow up until (...) 2018 to assess the ultimate outcome of each allegedly fraudulent campaign. First, we construct a sample of 193 fraud cases, and categorize them intodetectedvs.suspectedfraud, based on a set of well-defined criteria. Next, using multiple matched samples of non-fraudulent campaigns, we determine which features are associated with a higher probability of fraudulent behavior. Second, we document the short-term negative consequences of possible breaches of trust in the market, using a sample of more than 270,000 crowdfunding campaigns from 2010 through 2018 on Kickstarter. Our results show that crowdfunding projects launched around the public announcement of a late and significant misconduct detection (resulting in suspension) tend to have a lower probability of success, raise less funds, and attract fewer backers. (shrink)

Fraud in the reward-based crowdfunding market has been of concern to regulators, but it is arguably of greater importance to the nascent industry itself. Despite its significance for entrepreneurial finance, our knowledge of the occurrence, determinants, and consequences of fraud in this market, as well as the implications for the business ethics literature, remain limited. In this study, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010 through 2015. We then follow up until (...) 2018 to assess the ultimate outcome of each allegedly fraudulent campaign. First, we construct a sample of 193 fraud cases, and categorize them into detected vs. suspected fraud, based on a set of well-defined criteria. Next, using multiple matched samples of non-fraudulent campaigns, we determine which features are associated with a higher probability of fraudulent behavior. Second, we document the short-term negative consequences of possible breaches of trust in the market, using a sample of more than 270,000 crowdfunding campaigns from 2010 through 2018 on Kickstarter. Our results show that crowdfunding projects launched around the public announcement of a late and significant misconduct detection (resulting in suspension) tend to have a lower probability of success, raise less funds, and attract fewer backers. (shrink)