Chapter

Workers and Corporate Fraud

in The Failure of Corporate Law

Published by University of Chicago Press

Published in print February 2007 | ISBN: 9780226306933
Published online March 2013 | e-ISBN: 9780226306988 | DOI: http://dx.doi.org/10.7208/chicago/9780226306988.003.0009
Workers and Corporate Fraud

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As one considers new ideas for corporate governance, one is struck by the fact that a huge legal framework exists to punish corporations that lie to or mislead their shareholders. At the same time, corporations need not worry a great deal about lying to or misleading employees. It is a serious flaw in the law of corporate governance that companies can make misrepresentations to employees with legal impunity, while misrepresentations to shareholders are subject to a range of civil and criminal penalties. It is possible that there is less need for government regulation protecting workers from corporate fraud because either the market or common law will provide the protection workers need, but these regulatory methods cannot provide this necessary protection for a variety of reasons. This chapter explains why fraud protection in the capital market is important, discusses the absence of federal fraud protection in the labor market, and considers the importance of accurate information in the labor market.

Keywords: corporate fraud; workers; corporate governance; capital market; labor market; common law; shareholders; regulation

Chapter.  12994 words. 

Subjects: Company and Commercial Law

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