Purpose

The paper investigates whether political geography, as measured by the degree of alignment of state politicians with the party of the USA President, has an impact on corporate fraud convictions.

Design/methodology/approach

Prior research shows that the degree of alignment between state politicians and the president's political party is positively correlated with measures of earnings management for firms headquartered in the state. Political alignment is conducive to earnings management because it affects a firm's information and enforcement environment by increasing policy risk and promoting lenient regulatory oversight. The paper posits that this environment is also conducive to corporate fraud and tests this hypothesis using pooled ordinary least squares (OLS) and panel regressions with annual state-level data for 2003–2018.

Findings

The paper documents a positive and statistically significant relationship between political alignment and corporate fraud conviction rates by state.

Research limitations/implications

The conclusions are tempered by data limitations. First, the conviction data are available at the state level only. Second, the true level of fraud is inherently unobservable and the conviction data may not reflect the actual number of frauds that are committed.

Practical implications

Fraud examiners might benefit from considering the role of political connectedness in determining fraud risk. Although additional research is needed before making concrete recommendations, the initial indications clearly point to political connections as a potential concern.

Originality/value

The findings build on evidence that political connections influence earnings management. Rather than focusing on direct measures of connectedness, such as lobbying expenditures, the paper examines a plausibly exogenous measure: political geography.

中文翻译：

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政治联盟和公司欺诈：来自美利坚合众国的证据

目的

该论文调查了政治地理（以州政客与美国总统所在政党的结盟程度来衡量）是否对企业欺诈定罪产生影响。

设计/方法论/途径

先前的研究表明，州政治家与总统政党之间的联盟程度与总部位于该州的公司的盈余管理措施呈正相关。政治联盟有利于盈余管理，因为它通过增加政策风险和促进宽松的监管来影响公司的信息和执行环境。该论文假设这种环境也有利于企业欺诈，并使用汇总普通最小二乘法 (OLS) 和面板回归以及 2003-2018 年年度州级数据检验了这一假设。

发现

该论文记录了各州政治联盟与企业欺诈定罪率之间存在的积极且具有统计显着性的关系。

研究局限性/影响

结论受到数据限制的影响。首先，定罪数据仅在州一级可用。其次，欺诈的真实程度本质上是无法观察的，定罪数据可能无法反映欺诈的实际数量。

实际影响

考虑政治关联性在确定欺诈风险中的作用，欺诈审查员可能会受益。尽管在提出具体建议之前还需要进行更多研究，但初步迹象明确表明政治关系是一个潜在的问题。

原创性/价值

这些发现建立在政治关系影响盈余管理的证据之上。本文没有关注游说支出等直接衡量连通性的指标，而是研究了一种看似合理的外生指标：政治地理。