by
Wulf A. Kaal*
*Associate Professor, University of Saint Thomas School of Law (Minneapolis).
&
Timothy A. Lacine*
*J.D. 2014, University of St. Thomas School of Law; MBA 2008, University of Minnesota.
Abstract
Non- and Deferred Prosecution Agreements (N/DPAs), are controversial because prosecutors, not judges or the legislature, are changing the governance of leading public corporations and entire industries. The evaluation of issues pertaining to the effect of N/DPAs on corporate governance in prior studies is largely based on anecdotal evidence and case studies. To analyze N/DPAs’ corporate governance implications and provide policy makers with guidance, the authors code all publicly available N/DPAs (N=257) from 1993 to 2013, identifying 215 governance categories and sub-categories. The authors find evidence that the execution of N/DPAs is associated with significant corporate governance changes. The study evaluates mandated corporate governance changes for entities that executed an N/DPA in the following general categories: (1) Business Changes, (2) Board Changes, (3) Senior Management, (4) Monitoring, (5) Cooperation, (6) Compliance Program, and (7) Waiver of Rights, supplemented by a more in depth analysis of the respective subcategories of governance changes. The authors also code and evaluate preemptive remedial measures, designed by corporations to preempt the execution of an N/DPA or corporate criminal indictment.
Keywords: Non Prosecution Agreement, Deferred Prosecution Agreement, Panel Data, Corporate Governance
JEL Classification: G3, K14, K22
Wulf Kaal 