Proceedings of the International Association for Business and Society

Volume 10, 1999

Proceedings of the Tenth Annual Meeting

Corporate Criminal Liability
A Tool for Corporate Governance Reform

The existence of the federal Sentencing Guidelines, and the power of the Justice Department to extract behavioral promises in exchange for a beneficial plea agreement, now make it possible for the criminal justice system to have a direct and significant impact on corporate governance practices. In feet, in several recent cases, government prosecutors have built into corporate plea agreements specific improvements in board composition and changes in management’s monitoring practices. These developments, in turn, have stimulated some prophylactic governance changes. The Justice Department should now consider further uses of its powers in this area. And both shareholders and other stakeholders should welcome the exercise of these powers.