The last ten years might be called the decade of self criticism. In 2001, the Securities and Exchange Commission dangled a formal carrot of leniency for firms that “promptly, completely, and effectively disclosed the existence of the misconduct to the public [and] to regulators”. The Seaboard Report. The carrot is there but what are the chances that a company actually gets it?

Should Companies Listen To Circe?

There can be no doubt that cooperation benefits the SEC, but are companies better off if they stop their ears to the SEC’s siren song of cooperation? Recently, I came across a paper by Assistant Professor Rebecca Files at the University of Texas at Dallas that tackles this question.