Nathan Atkinson

In new research, Anat R. Admati, Nate Atkinson, and Paul Pfleiderer argue that when misconduct is profitable, enforcement mechanisms aimed at deterring corporate misconduct often fail to achieve their goals and they may even backfire. The reason is that corporations can adjust internal governance mechanisms, particularly managerial compensation, to reduce or nullify the deterrent effects of corporate or managerial sanctions. These responses may lead to more misconduct and exacerbate social harm.

Government regulators may reduce corporate fines for criminal behavior if the fines threaten the firm’s survival, thus posing harms to employees and society. In a recent paper, Nathan Atkinson explores the frequency with which government regulators reduce fines and evaluates if these reductions are justified or if regulators are undermining their own capabilities to deter bad behavior and fully compensate harmed parties.