Field Course: Corporate Misconduct - Harvard Business School MBA Program

Field Course: Corporate Misconduct

Course Number 6137

Associate Professor Eugene Soltes
Spring; Q3Q4; 3 credits
Enrollment: 25 students (with an additional 40 students possible in 1.5 credit version )

NOTE: Two approaches are available in Spring 2020. Students can choose to enroll in the 1.5 credit Q3 course (1375). Alternatively, the 3-credit Field Course: Corporate Misconduct involves 14 class sessions during Q3 and an additional independent paper/project during Q4 applying concepts from the course. Students who elect this option take the Q3 Corporate Misconduct will conclude the course with an exam, but those in the 3 credit CM will instead develop a project in consultation with the instructor, due at the end of Q4.

Over the past two decades, corporate criminal liability has grown dramatically. In 2000, a quarter of a billion dollars in criminal fines were assessed against companies by U.S authorities. By 2017, corporate criminal fines had grown 40-fold, reaching over $10 billion. Civil regulatory matters from deceptive disclosure to harassment-related suits create financial and reputational costs for organizations, further contributing to the growth in corporate sanctions. In this course, we will explore why misconduct is so pervasive, how the legal and regulatory environment sanctions malfeasance, and what strategies managers can employ to prevent and respond to misconduct.

The introductory sessions of the class will focus on understanding why misconduct occurs from a psychological and organizational perspective. We will discuss cases where misconduct arises for different reasons including poorly designed incentives, failure of controls, lack of awareness, and regulatory ambiguity. After establishing a set of contributing factors, we will explore the laws sanctioning malfeasance. We will explore the difference between sanctions against firms and individuals, criminal and civil sanctions, and alternative prosecution agreements and remediation arrangements (e.g. deferred prosecution agreements, corporate monitors). We will also discuss how organizations located in one jurisdiction and doing business in another can still face considerable sanctions by US (and other) regulators for misconduct. We will explore areas of misconduct including bribery, sanctions, money laundering, and racketeering. In the final module of the class, we will focus on strategies to prevent and respond to misconduct. These cases will focus on the programs that firms employ, with a particular emphasis on using data to more effectively prevent and respond to potential misconduct. In this module, we will also examine how organizations proceed with internal investigations when allegations of misconduct are detected and how firms can respond when such cases arise.

By the end of the course, students should develop a more sophisticated understanding of both the causes and consequences of misconduct. This course will not place specific emphasis on normative ethical questions. Instead, the course will take a more tactical approach examining how firms and regulators manage issues related to misconduct. Readings for the course will be particularly diverse and include case studies, law review articles, criminal indictments, book chapters, and recent news articles.

Corporate Misconduct (Field) will give students opportunities to work with companies or regulatory bodies on actual issues related to misconduct and corporate integrity. Students will have the opportunity to join a team to work on a choice of projects curated by the instructor or design their own project with approval from the professor.