Deterrence Theory Essay

3.0 Prevention

There are two theories that attempt to explain how to prevent corporate crime: deterrence theory and compliance theory. Theories of deterrence focus on preventing individuals from committing crimes based on a fear of the consequences. Compliance theories, on the other hand, concentrate on the power of regulatory agencies to encourage individuals to comply with the law before crimes are committed. The biggest difference in these theories is the way that laws are enforced on corporate criminals. Deterrence theories rely on criminal prosecutions to prevent corporate crime after the crime has already been committed (ex-post), where as compliance theories focus regulatory agencies that encourage compliance with the law before the crime takes place (ex-ante).

3.1 Deterrence Theory

Deterrence theory argues that individuals act in accordance with their self-interest and obey the law because they fear the penalties of criminal behavior. More often than not, they choose not to commit crimes because they have seen harsh punishments imposed on others. Current research on deterrence emphasizes the role of the criminal justice system enforcing and punishing offenders. The fear of detection, conviction, and punishment resulting from prosecution forms the core of deterrence theory. Therefore, individuals decide whether or not to commit crimes based by weighing the possibility of punishment from criminal prosecution

against their ability to profit from illegal activity. Although deterrence is one of the central objectives of the criminal justice system, there is little consensus as to whether or not prosecutions effectively deter corporate crime.

In a study conducted by the American Antitrust Institute, data were collected ...

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... is conducted and meeting compliance validates the operational quality of the corporation.

4.0 Conclusion

After a case like Enron, it is easy to be pessimistic about the prospects for change that could effectively prevent corporate crime. The ideas presented in this paper suggest that regulatory agencies can play a fundamental role not only in encouraging compliance with the law, but also deterring corporate crime. It is clear that corporate crime has substantial effects on its victims, yet corporations or their executives are not always held accountable for their actions. Compared to criminal prosecutors, regulators have more knowledge and resources to monitor corporations and potential offenders better understand the penalties associated with regulation. For these reasons, the power of regulatory agencies to monitor business practices should be increased.