Is financial stress a facilitating factor in cartel formation?
It is well-known that failing to achieve key organizational goals may pressure managers to commit fraud, but can it be a facilitating factor in cartel formation as well? The purpose of this study is to understand if firms known to have been in a cartel were under financial stress in the period leadi...
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| Format: | Article |
| Language: | English |
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Elsevier
2025-03-01
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| Series: | Journal of Economic Criminology |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2949791425000028 |
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| _version_ | 1832595661389824000 |
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| author | Jesper Fredborg Huric-Larsen |
| author_facet | Jesper Fredborg Huric-Larsen |
| author_sort | Jesper Fredborg Huric-Larsen |
| collection | DOAJ |
| description | It is well-known that failing to achieve key organizational goals may pressure managers to commit fraud, but can it be a facilitating factor in cartel formation as well? The purpose of this study is to understand if firms known to have been in a cartel were under financial stress in the period leading up to the cartel formation. A trend analysis is used to examine the performance of the firms before, during, and after the cartel period. The study uses accounting data on firms belonging to sanctioned cartels. In addition, the data is used to determine if firms can achieve joint profit maximization and what happens to firm performance after the cartel is broken down. The results support the proposition that financial stress can be a motivating factor for cartel formation. Moreover, the results show that several firms fall short of benefitting from cartel participation and that cartel breakdown often leads to a worse than initial outcome. The conclusion is that financial stress increases the chances of firms engaging in cartel activity. And, that structural break analyses can likely detect cartels using trends in the performance of firms. |
| format | Article |
| id | doaj-art-135d006264cf4df08f2262af3ac6e03c |
| institution | Kabale University |
| issn | 2949-7914 |
| language | English |
| publishDate | 2025-03-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Economic Criminology |
| spelling | doaj-art-135d006264cf4df08f2262af3ac6e03c2025-01-18T05:05:40ZengElsevierJournal of Economic Criminology2949-79142025-03-017100126Is financial stress a facilitating factor in cartel formation?Jesper Fredborg Huric-Larsen0Senior Lecturer at Karlstad University, SwedenIt is well-known that failing to achieve key organizational goals may pressure managers to commit fraud, but can it be a facilitating factor in cartel formation as well? The purpose of this study is to understand if firms known to have been in a cartel were under financial stress in the period leading up to the cartel formation. A trend analysis is used to examine the performance of the firms before, during, and after the cartel period. The study uses accounting data on firms belonging to sanctioned cartels. In addition, the data is used to determine if firms can achieve joint profit maximization and what happens to firm performance after the cartel is broken down. The results support the proposition that financial stress can be a motivating factor for cartel formation. Moreover, the results show that several firms fall short of benefitting from cartel participation and that cartel breakdown often leads to a worse than initial outcome. The conclusion is that financial stress increases the chances of firms engaging in cartel activity. And, that structural break analyses can likely detect cartels using trends in the performance of firms.http://www.sciencedirect.com/science/article/pii/S2949791425000028Cartel formationfinancial stressmanagerial incentiveswhite-collar crime |
| spellingShingle | Jesper Fredborg Huric-Larsen Is financial stress a facilitating factor in cartel formation? Journal of Economic Criminology Cartel formation financial stress managerial incentives white-collar crime |
| title | Is financial stress a facilitating factor in cartel formation? |
| title_full | Is financial stress a facilitating factor in cartel formation? |
| title_fullStr | Is financial stress a facilitating factor in cartel formation? |
| title_full_unstemmed | Is financial stress a facilitating factor in cartel formation? |
| title_short | Is financial stress a facilitating factor in cartel formation? |
| title_sort | is financial stress a facilitating factor in cartel formation |
| topic | Cartel formation financial stress managerial incentives white-collar crime |
| url | http://www.sciencedirect.com/science/article/pii/S2949791425000028 |
| work_keys_str_mv | AT jesperfredborghuriclarsen isfinancialstressafacilitatingfactorincartelformation |