Ditching Deterrence : Preventing Crime by Reforming Corporations Rather than Fining Them

This short paper proposes abandoning the corporate criminal fine and exclusively punishing criminal corporations by reforming them. Fining corporations is not an effective way to prevent corporate misconduct. Corporate fines cannot reliably deter at the entity level because corporations faced with fines can invest in concealing misconduct rather than avoiding it. Corporate fines also fail to deter individuals within corporations because the corporate structure distributes the impact of fines among all corporate stakeholders. This paper argues that replacing corporate fines with corporate reform would address both these problems. Coerced reform could directly target entity-level compliance vulnerabilities and would give individuals within corporations stronger incentives to obey the law