Fraud is often coupled with misconduct and the two are certainly related; fraud by definition is misconduct, but not all misconduct is fraud. Fraud always contains intent whilst misconduct covers a wide range of activities, from carelessness, right through to deliberate deception. It is vitally important that fraud and misconduct, once suspected, are reported and fully investigated. But unless everyone involved in research at any level accepts the possibility that fraud exists, there will (...) still be research fraud, and patients will continue to be abused and put at risk. (shrink)

Objective—To determine the prevalence of, and attitudes towards, observed and personal research misconduct among newly appointed medical consultants. Design—Questionnaire study.Setting—Mersey region, United Kingdom.Participants—Medical consultants appointed between Jan 1995 and Jan 2000 in seven different hospital trusts (from lists provided by each hospital's personnel department). Main outcome measures—Reported observed misconduct, reported past personal misconduct and reported possible future misconduct.Results—One hundred and ninety-four replies were received (a response rate of 63.6%); 55.7% of respondents had observed some form of research misconduct; (...) 5.7% of respondents admitted to past personal misconduct; 18% of respondents were either willing to commit or unsure about possible future research misconduct. Only 17% of the respondents reported having received any training in research ethics. Anaesthetists reported a lower incidence of observed research misconduct (33.3%) than the rest of the respondents (61.5%) (p<0.05). Conclusion—There is a higher prevalence of observed and possible future misconduct among newly appointed consultants in the UK than in the comparable study of biomedical trainees in California. Although there is a need for more extensive studies, this survey suggests that there is a real and potential problem of research misconduct in the UK. (shrink)

I was not impressed by Dr Geggie's article offering a survey of the attitudes of newly appointed consultants towards research fraud ( Journal of Medical Ethics 2001; 27 :344–6). Indeed, by mixing up categories of misconduct from what is at most “bad behaviour” to the very serious, he is not entirely beyond reproach himself. I remind readers that Dr Geggie suggested that 55.7% of the respondents had observed (from the title) “research fraud”. If the term “ (...) class='Hi'>research fraud” is to have any meaning, it must be reserved for conduct that consciously and deliberately attempts to impose a fraud on others. The US National Academy of Sciences' report, On Being a Scientist: Responsible Conduct in Research distinguishes clearly between “misallocation of credit, honest errors, and errors caused through negligence” and “deception, making up data or results, changing or misreporting data or results, and plagiarism”. The former are “ethical transgressions... that generally remain internal to the scientific community... dealt with locally through peer review, administrative action, and the system of appointments and evaluations”. The latter “strike at the heart of the values on which science is based”. The White House's Office of Science and Technology Policy reached similar conclusions, restricting research misconduct to “fabrication, falsification and plagarism”. I agree with these assessments. In Dr Geggie's paper, deception would include deliberate falsification of data (category 3 of Dr Geggie's table 1), cheating (4A) and deliberately plagiarising …. (shrink)

Next SectionBackground Scientific papers are retracted for many reasons including fraud (data fabrication or falsification) or error (plagiarism, scientific mistake, ethical problems). Growing attention to fraud in the lay press suggests that the incidence of fraud is increasing. Methods The reasons for retracting 742 English language research papers retracted from the PubMed database between 2000 and 2010 were evaluated. Reasons for retraction were initially dichotomised as fraud or error and then analysed to determine specific reasons (...) for retraction. Results Error was more common than fraud (73.5% of papers were retracted for error (or an undisclosed reason) vs 26.6% retracted for fraud). Eight reasons for retraction were identified; the most common reason was scientific mistake in 234 papers (31.5%), but 134 papers (18.1%) were retracted for ambiguous reasons. Fabrication (including data plagiarism) was more common than text plagiarism. Total papers retracted per year have increased sharply over the decade (r=0.96; p<0.001), as have retractions specifically for fraud (r=0.89; p<0.001). Journals now reach farther back in time to retract, both for fraud (r=0.87; p<0.001) and for scientific mistakes (r=0.95; p<0.001). Journals often fail to alert the naïve reader; 31.8% of retracted papers were not noted as retracted in any way. Conclusions Levels of misconduct appear to be higher than in the past. This may reflect either a real increase in the incidence of fraud or a greater effort on the part of journals to police the literature. However, research bias is rarely cited as a reason for retraction. (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)

Introduction -- Fraud in research : frequency patterns -- An organizational approach to research fraud -- Fraud, lies, deceptions, fabrications, and falsifications -- Deviance in scientific research : norms, hot spots, control -- Concluding discussion.

B\ig fraud, little lies -- Serial cheaters -- Storytelling and beautification -- Researching for results -- Corporate cooking -- Skewed competition -- Stealing authorship -- The funding effect -- There is no profile -- Toxic literature -- Clinical trials -- The jungle of journal publishing -- Beyond denial -- Scientific crime -- Slow science.

A review of fraud in medical research in Britain, Europe, the USA and Australia. It includes a history of known cases of fraud since 1974 and discusses ways for detecting and dealing with fraud that have been devised by government agencies, pharmaceutical companies, academic institutions and scientific publications (especially medical journals).

Frauds and misconduct have been common in the history of science. Recent events connected to the COVID-19 pandemic have highlighted how the risks and consequences of this are no longer acceptable. Two papers, addressing the treatment of COVID-19, have been published in two of the most prestigious medical journals; the authors declared to have analysed electronic health records from a private corporation, which apparently collected data of tens of thousands of patients, coming from hundreds of hospitals. Both papers have been (...) retracted a few weeks later. When such events happen, the confidence of the population in scientific research is likely to be weakened. This paper highlights how the current system endangers the reliability of scientific research, and the very foundations of the trust system on which modern healthcare is based. Having shed light on the dangers of a system without appropriate monitoring, the proposed analysis suggests to strengthen the existing journal policies and improve the research process using new technologies supporting control activities by public authorities. Among these solutions, we mention the promising aspects of the blockchain technology which seems a promising solution to avoid the repetition of the mistakes linked to the recent and past history of research. (shrink)

In this review of the Korean cloning scandal involving Woo-Suk Hwang, the nature of the disaster is documented and reasons why it occurred are suggested. The general problems it raises for scientific research are highlighted and six possible ways of improving practice are offered in the light of this case: better education of science students; independent monitoring and validation; guidelines for tissue donation for research; fostering of debate about ethically contentious research in science journals; development of an (...) international code of ethical research practice; fostering of public involvement in ethical review and debate through the web. (shrink)

OBJECTIVES: To study and describe how a group of senior researchers and a group of postgraduate students perceived the so-called "grey zone" between normal scientific practice and obvious misconduct. DESIGN: A questionnaire concerning various practices including dishonesty and obvious misconduct. The answers were obtained by means of a visual analogue scale (VAS). The central (two quarters) of the VAS were designated as a grey zone. SETTING: A Swedish medical faculty. SURVEY SAMPLE: 30 senior researchers and 30 postgraduate students. RESULTS: Twenty (...) of the senior researchers and 25 of the postgraduate students answered the questionnaire. In five cases out of 14 the senior researchers' median was found to be clearly within the interval of the grey zone, compared with three cases for the postgraduate students. Three examples of experienced misconduct were provided. Compared with postgraduate students, established researchers do not call for more research ethical guidelines and restrictions. CONCLUSION: Although the results indicate that consensus exists regarding certain obvious types of misconduct the response pattern also indicates that there is no general consensus on several procedures. (shrink)

For several decades, most discussion on financial fraud has centered on the fraud triangle, which has evolved over time through various extensions and re-interpretations. While this has served the profession well, the articulation of the human side of the act is indirect and diffused. To address this limitation, this research develops a model to explain the role of human desires, intentions, and actions in indulgence of, or resistance to, the act of financial fraud. Evidence from religion, (...) philosophy, sociology, neurology, behavioral economics, and social psychology is integrated to develop and support an alternative fraud model, called the disposition-based fraud model. To articulate the model, its two primary components, disposition and temptation, are further developed and extended. Although the DFM is generally applicable to any act of fraud, this paper focuses on executive fraud. The similarities and differences between the DFM and extant fraud models are discussed. Importantly, in light of the DFM, a re-interpretation of the fraud triangle is made to improve our understanding of the human element in it. Additionally, potential implications of the model for corporate governance are discussed, suggestions for further research are offered, and the DFM’s strengths and limitations are noted. (shrink)

This introductory article frames our special issue in terms of how historicizing research integrity and fraud can benefit current discussions of scientific conduct and the need to improve public trust in science.

The pandemic has altered accounting education with the widespread adoption of remote evaluation platforms. We apply the lens of the fraud triangle to consider how the adoption of remote evaluation influences accounting students’ ethical values by measuring the incidence of cheating behavior as well as capturing their perceptions of their opportunity to cheat and their rationalization of cheating behavior. Consistent with prior research, our results show that cheating is higher in the online environment compared to remote evaluation, although (...) the use of proctoring software in online evaluation appears to mitigate but not eliminate students’ the unethical behavior. However, cheating was not reduced when students attest to an honor code during the beginning of an exam. Nonetheless, we find that the use of both proctoring software and honor codes reduces students’ perceptions of opportunity and rationalization of cheating behavior. It follows that the remote evaluation environment may unintentionally be negatively influencing the ethicality of students and future accounting professionals by promoting cheating behavior and, by so doing, negatively influencing the development of unethical values of accounting students and future accounting professionals. Educators should consider the use of appropriate educational interventions to reduce the incidence and opportunities for unethical behavior and, by so doing, help promote the development of ethical values in future accounting professionals. Further implications for teaching and the accounting profession are discussed. (shrink)

Fraud in medical publications is an increasing concern. In particular, disciplines related to perioperative medicine—including anaesthesia and critical care—currently hold the highest rankings in terms of retracted papers for research misconduct. The dominance of this dubious achievement is attributable to a limited number of researchers who have repeatedly committed scientific fraud. In the last three decades, six researchers have authored 421 of the 475 papers retracted in perioperative medicine. This narrative review reports on six cases of fabricated (...) publication in perioperative medicine that resulted in the paper’s retraction. The process that led to the unveiling of the fraud, the impact on clinical practice, and changes in regulatory mechanisms of scientific companies and governmental agencies’ policies are also presented. Fraud in medical publications is a growing concern that affects perioperative medicine requiring a substantial number of papers to be retracted. The continuous control elicited by readers, by local institutional review boards, scientific journal reviewers, scientific societies and government agencies can play an important role in preserving the ‘pact of trust’ between authors, professionals and ultimately the relationship between doctors and patients. (shrink)

Fraud in medical publications is an increasing concern. In particular, disciplines related to perioperative medicine—including anaesthesia and critical care—currently hold the highest rankings in terms of retracted papers for research misconduct. The dominance of this dubious achievement is attributable to a limited number of researchers who have repeatedly committed scientific fraud. In the last three decades, six researchers have authored 421 of the 475 papers retracted in perioperative medicine. This narrative review reports on six cases of fabricated (...) publication in perioperative medicine that resulted in the paper’s retraction. The process that led to the unveiling of the fraud, the impact on clinical practice, and changes in regulatory mechanisms of scientific companies and governmental agencies’ policies are also presented. Fraud in medical publications is a growing concern that affects perioperative medicine requiring a substantial number of papers to be retracted. The continuous control elicited by readers, by local institutional review boards, scientific journal reviewers, scientific societies and government agencies can play an important role in preserving the ‘pact of trust’ between authors, professionals and ultimately the relationship between doctors and patients. (shrink)

The reasons for judgment by the Supreme Court of Canada on the appeal in Mabior (2012 SCC 47) fail to address or resolve a number of significant questions. The reasons acknowledge the fundamental role of sexual consent in protecting sexual autonomy, equality, and human dignity, but do not use the law of consent as a tool to assist the Court in crafting a fresh approach to the issue on appeal. Instead the Court adopts the same general approach to analysis of (...) the elements of aggravated sexual assault committed by fraud it used in 1998 in Cuerrier. Fifteen years later, it should be possible to re-conceptualize the problem in a more straightforward manner that reflects Charter values, fundamental common law principles, recent developments in sexual assault law, and the limitations and uncertainties of current HIV treatment and diagnosis. -/- Ironically, the two pronged legal test ultimately proposed by the Court -- non-disclosure of HIV-positive status and a “realistic possibility of transmission,” is likely to give false confidence to individuals who adhere to a regime of anti-retroviral treatment, use good quality latex condoms, and routinely conceal their HIV-positive status from their sexual partners. Research shows that HIV viral loads fluctuate widely in response to a myriad of factors. An inevitable consequence of reliance on the Mabior test will be accused who are shocked to find themselves charged under s. 273, charges that would not apply had they disclosed their HIV-positive status to their sexual partner(s). There are further practical consequences. Non-disclosure will tend to increase the risk of transmission because non-HIV-positive sexual partner(s) will not fully appreciate the actual hazards of improper condom use. As a direct result, careless sexual practices will be more common. And finally, the decision will not contribute to reducing the social stigma that haunts the lives of those who are HIV-positive -- even those who are skilled at deceit. That stigma will not be reduced or eliminated by a ruling that can be seen as tacitly validating stigmatization and fear by appearing to permit infected individuals to pretend they are not HIV-positive when they know or suspect this to be false. Deceit harms the human dignity of the deceived and deceiver alike, and does nothing to build authentic social trust and cohesion. For all these reasons, the problem on appeal in Mabior requires a different approach. This article proposes one. (shrink)

Even as today’s spectacular advances in science enhance the quality of life, so also are new opportunities created for those who would deliberately mislead a scientifically ill-informed public. The scientific community, made up of those who participate in professional science organizations and publish their methods and findings in the open scientific literature, have a responsibility to keep the public informed of scams carried out in the name of science. Fraud within the scientific community should be quickly exposed by the (...) culture of openness. Secrecy in the name of national security offers a refuge for fraudulent science. (shrink)

The theorisation of fraud has largely been developed in the for-profit sector, and the paper extends this to the not-for-profit sector. Motivated by social control theory, we adopt a qualitative approach to assess the views of key charity stakeholders (social control agents) of charities registered with the Charity Commission for England and Wales about fraud. We find that stakeholders, especially donors and beneficiaries, are often reluctant to label ‘fraud’ as a threat to the sector. This reflects ‘trusting (...) indifference’, a value embedded in the sector that brings more harm than good to the sector in terms of wrongdoing, by hampering effective social control. Adapting existing theories of fraud to charities, we propose a ‘fraud tower’ with three layers: the social layer (trusting indifference), organisational layer (opportunity), and individual layer (fraudsters-opportunity seekers). (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 acquaintance debate in aesthetics has been traditionally divided between pessimists, who argue that testimony does not provide others with aesthetic knowledge of artworks, and optimists, who hold that acquaintance with an artwork is not a necessary precondition for acquiring aesthetic knowledge. In this paper I propose a reconciliationist solution to the acquaintance debate: while aesthetic knowledge can be had via testimony, aesthetic judgment requires acquaintance with the artwork. I develop this solution by situating it within a virtue aesthetics framework (...) based on Ernest Sosa's virtue epistemology. I go on to apply the solution to the debates on moral testimony and expert testimony. An interesting variant on Gettier cases emerges: cases in which subjects have knowledge, but it has been formed by the wrong competence. (shrink)

The study aimed to identify the effect of applying detection and prevention tools for career fraud in combating and preventing fraud and reducing its risks through an applied study on Palestinian Ministry of Health in Gaza Strip, Palestine. To achieve the objectives of the study, the researchers used the questionnaire as a main tool to collect data, and the descriptive and analytical approach to conducting the study. The study population consisted of (501) supervisory employees working at MOH in (...) Gaza Strip, Palestine. The researchers used the stratified random sample method and the multiple regression method to measure the effect. The study concluded a set of results, the most important of which is a positive evaluation among respondents about the levels of application of tools to detect and prevent job fraud within MOH, and the presence of a high interest in tools to prevent job fraud during the implementation of its various work. The study recommended the necessity for the Palestinian National Authority to develop and approve laws regulating health sector, so that those laws guarantee the prevention of conflicts of interest, especially for the category of doctors, by preventing job duplication of doctors working in the government sector. Also study recommended the need for MOH to adopt principles of health sector governance and begin immediately to implement them. This process to ensure transparency, disclosure and accountability in the business framework in a manner that realizes the effective protection of stakeholders and does not compromise or discriminate in the application of these principles, which ensures that all forms of job fraud are organized in an organized manner and within fixed legal frameworks. (shrink)

Alerte! La malscience se répand aussi vite que la malbouffe! D'apparence de plus en plus sophistiquée mais produite en masse, de plus en plus vite et de moins en moins fiable. Interrogés de manière anonyme, 2 % des scientifiques reconnaissent avoir inventé ou falsifié des données. Soit pas moins de 140 000 chercheurs fraudeurs de par le monde. Biologie et médecine sont, de loin, les plus touchées. Et ces fraudes manifestes ne sont rien à côté des petits arrangements avec la (...) rigueur qui sont devenus fréquents dans les laboratoires. Est-ce grave? Très grave. Car la biologie et la médecine traitent de la santé, de la vie, de la mort. Est-il acceptable que de nouveaux médicaments soient testés, et peut-être autorisés, sur la base d'expériences plus ou moins truquées? Comme le secteur financier miné par ses créances irrécupérables, la littérature scientifique en biologie et en médecine s'avère de plus en plus gangrenée par des articles toxiques. Ce livre revient sur une série de scandales internationaux - des frères Bogdanoff à des cas moins médiatiques mais non moins dangereux - et se propose de réfléchir aux causes d'une telle dérive et aux moyens d'y remédier. A la fois enquête de terrain et essai critique, il met en lumière un aspect fondamental et trop ignoré de l'évolution actuelle des pratiques scientifiques. (shrink)

Internet fraud is an issue that increasingly concerns regulators, consumers, firms, and business ethics researchers. In this article, we examine one common form of internet fraud, the practice of shill bidding (when a seller in an auction enters a bid on his or her own item). The significant incidence of shill bidding on eBay (in spite of the fact that it is illegal just as it is in live auctions) exemplifies the current ineffectiveness of regulatory means as well (...) as the lack of effective societal mechanisms to prevent online fraud. Further, the proliferation of shill bidding along with other types of internet fraud may have broader implications. If unethical behavior such as shill bidding becomes too widespread on the internet, regulators and other societal forces may deem it necessary to institute controls that will impact the entire online marketplace as well as the future development and regulation of business activities on the internet. Our results indicate that shill bidding is perpetrated on eBay significantly more often than 0.1% rate of fraud estimated by the firm. This suggests that regulators, users, and others stakeholders may become concerned enough to act. The impact of those responses on the internet of the future may affect a broad array of users beyond the unethical sellers on eBay. (shrink)

Ever since the great Florida meltdown in the presidential election of 2000, Americans have had reason to suspect they may not, after all, live in the greatest democracy on the planet. We have seen breakdowns at every level of the system, from voter registration to voting machine software to provisional balloting to dubious purges of supposedly ineligible voters. Despite the lip service paid to the genius of the American system, the reality is that elections in this country have rarely been (...) about transparency and fair play; they are not about who deserves to win so much as how much each side is prepared to do to push and scrape its way over the finish line. The United States has a history of electoral malfeasance and fraud unrivalled in the rest of the western world -- a result of the unique circumstances of its democratic deve;lopment. Its claims to democratic greatness are themselves fraudulent, and now subject to closer scrutiny than ever before. (shrink)

Fraud literature suggests that the presence or absence of fraudulent intentions can be assessed by a close scrutiny of human behaviour. This can help identify prospective fraud perpetrators. Given this consideration, the present study qualitatively explores the observations and views of people who have personally investigated or closely observed a fraud/fraudster. Twenty-six interviews help condense a checklist of behavioural red flags of fraud. The themes of strong ambition, social aloofness, extended working hours, dissatisfaction with current job, (...) justifying unethical behaviour, personal problems and living standard disproportionate to current means are central to the articulations of the experiences of the respondents. Findings of the study have been integrated with the theory of the fraud triangle. This research displays the complementarity between a primary data based ex-post analysis of the behaviour of fraud perpetrators and existing literature on the subject. The results are likely to help improve professional standards related to frauds, both from an organizational and regulatory perspective. (shrink)

Monetary compensation given to study subjects in a clinical trial is an effective tool to increase overall study enrolment, nonetheless it may stimulate some participants to commit fraud and lie about their medical history.A survey-study in 684 Hispanic prospective subjects in Mexico and USA was conducted to evaluate if a high monetary compensation would encourage them to lie about their medical history. Almost half of the subjects considered participating in a clinical trial with no compensation. Younger male individuals were (...) more likely to consider committing fraud in order to receive a relatively high compensation. On the other hand, individuals with either low or high educational backgrounds, as those with higher income, were less likely to consider committing fraud. (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)

Given the importance of scientific research in shaping our perception of the world, and our senses of what policies will and won’t succeed in altering that world, it is of great practical, political, and moral importance that we carry out scientific research with integrity. The phenomenon of scientific fraud stands in the way of that, as scientists may knowingly enter claims they take to be false into the scientific literature, often knowingly doing so in defiance of norms (...) they profess allegiance to. In this chapter we take a look at some of the causes of scientific fraud, and how it might be manifested in large-scale research teams and situations of anonymous authorship. We find that such cases make trouble for what might seem like intuitive answers to the question “who should be held responsible for this fraud?”, and we argue that in such cases it would be better to hold the entire community responsible for seeing to it that there is less fraud. (shrink)

We examine the relation between worker substance abuse and workplace fraud in a sample of medical doctors. Relative to their peers, we observe that doctors engaging in substance abuse are between 50 and 100 times more likely to commit fraud in a given year. This result is consistent with research suggesting that substance abuse both creates financial pressures and impairs the functioning of cognitive self-regulatory mechanisms. Our results are robust in within-subject tests and between-subject tests, as well (...) as in tests using instrumental variables that exploit exogenous variation in the state-level availability of opioids, a commonly abused substance. (shrink)

This study examines whether the delegated monitoring of main banks effectively decreases severe agency problems. For example, this includes accounting fraud in bank-dominated corporate governance. In this context, the fraud triangle specifies the three main factors of opportunity, incentive, and rationalization. Main banks may reduce the factor of opportunity through actions such as monitoring, which plays a moderating role by reducing the potential for managerial misconduct, whereas, the incentive factor may be enhanced through the subsequent pressure that influences (...) managers to force turnover when they do not repay debts. The potential influence that the main banks have on the fraud rationalization factor may be stronger in firms that are more dependent on main-bank borrowing. This study analyzed data from publicly listed firms in Japan for the period between 2008 and 2016 to determine how main-bank relationships affected accounting fraud, thus allowing an assessment of delegated monitoring practices. Findings showed that main-bank relationships were helpful for reducing accounting fraud, suggesting its overall effectiveness in delegated monitoring. Results also showed that large audit firms did not necessarily prevent accounting fraud, which implies that main banks can employ their own monitoring as a substitute for the roles typically played by these firms. Here, the main policy implication is that main-bank relationships may strengthen business ethics in the context of bank-dominated corporate governance. In conclusion, the continued analysis of bank monitoring may benefit stakeholders while strengthening business ethics in bank-centered economies. (shrink)

Studies on health care practices, financing, and organization increasingly rely on Medicare and other expanded data sets. These studies are of critical importance for public policy and for the development of strategies to contain escalating health care costs, but they often use data that have been corrupted by fraud and abuse. Mistaken conclusions, as to the effectiveness of policy and procedures, are likely being reached in studies that have used corrupted data. Researchers need to consider the suspect nature of (...) results obtained from the corrupted data, and determine methods for making the data more valid. (shrink)

This paper examines the structural features of the U.S. Health Care System that make it particularly vulnerable to fraud, and which help to account for the types of fraud that arise and the difficulties authorities confront in controlling them. These structural features include the predominance of fee-for-service structures, private sector involvement in health care delivery and health insurance, highly automated cl aims processing systems, and a processing culture and audit mentality that emphasize process accuracy over verification. The paper (...) also discusses the underlying pathology of fraud as a white-collar crime problem, and explains how the more general challenges of controlling fraud are exacerbated by particular features of the health system. The central and unsolved problem of False Claims is examined in some detail. A series of recent governmental responses to medically impossible claims of various types is shown to align more closely with a claims-process-improvement mindset than with a crime-control approach. A more mature crime-control orientation is a pre-requisite for any serious progress in reducing the levels of fraud in the U.S. health system. (shrink)

There is a dearth of business ethics research on family firms, despite the importance of such firms to the US economy. We answer Vazquez’s call to examine the intersection of family-firm research and business ethics, by investigating whether external auditors assess higher risk of fraud in family firms. We test the contradictory predictions of two dominant theoretical perspectives in family-firm research—entrenchment theory and alignment theory. We conduct an experiment with highly experienced external audit professionals, who assess (...) the risk of fraud and make client acceptance decisions for family firms versus non-family firms with different strength of corporate governance: strong versus weak audit committees. We find that auditors assess the risk of fraud as higher for family firms than for non-family firms, consistent with the predictions of entrenchment theory. Auditors are also less likely to make client acceptance recommendations for family firms. The strength of the AC moderates the family-firm effect, whereby auditors assess family firms with weak ACs to have the highest fraud risk and to be the least desirable audit clients. Our findings suggest that auditors perceive more severe agency conflicts to be present in family firms than in non-family firms, consistent with entrenchment theory, according to which family members may behave opportunistically to extract rents and potentially expropriate the firm’s resources at the expense of minority shareholders. (shrink)

The development of behavioral ethics has brought forth a detailed understanding of the processes of moral perception, decision-making and behavior within and beyond organizations and communities. However, prescriptive recommendations of behavioral research regarding how to support an ethical environment often underestimate the specifics of organizational characteristics that may encourage the occurrence and persistence of dishonesty, especially regarding deception as a desired action in some instances by some employees and managers. Furthermore, behavioral research does not adequately recognize the notion (...) that dishonesty can be sometimes viewed as an acceptable cost for some expected traits or skills of an employee such as intelligence or creativity. Under some conditions, deception can be even considered a moral, prosocial activity. Finally, formal ethics systems and situational measures to promote honesty may be inefficient or directly harmful. This article highlights questions of how to assess such factors in research on (un)ethical behavior within organizations. (shrink)

Fraud, speculative bubbles and collapse, plus the resulting bankruptcies and hard times are a continuing part of the corporate environment. The 21st century is no exception, and its first decade has seen more than its share of abuse. This is somewhat surprising, given the level of regulation and oversight required. The focus here is primarily on Enron as a microcosm of all that can go wrong in a sophisticated, high-tech environment. Enron represents the long-term use of greed based primarily (...) on executive compensation incentives; poor corporate governance; executives willing to break the law or overlook others who did; the use of political lobbying; plus accommodating auditors, attorneys, analysts and regulators. Other fraud and abuse cases considered include WorldCom, Tyco, and Adelphi. In addition, the widespread corruption associated with the stock options scandals and the current housing collapse/banking crisis are reviewed, suggesting that the massive regulatory effort of Sarbanes-Oxley and other reforms have not solved the underlying problems. (shrink)

This paper explores how managers’ and supervisors’ equity incentives impact the likelihood of committing corporate fraud in Chinese-listed firms. Previous research has shown that corporate fraud in China is a widespread phenomenon and has severe consequences for affected firms and executives. However, our understanding of the reasons that fraud is committed in a Chinese setting has been very limited thus far. This is an increasingly important topic, because corporate governance is rapidly changing in China, and it (...) is unclear whether adopting the executive compensation practices of the West is appropriate for Chinese firms. We show that managers’ equity incentives increase their propensity to commit corporate fraud. We also find that this effect is more pronounced for state-owned firms. However, we find a negative but not significant relationship between the equity incentives of the supervisory board and the incidence of fraud. (shrink)