It takes two to tango: How persistent misconduct induces escalating contestation in the financial industry, 2005–2020

Research output: Contribution to conferencePaperAcademic

Abstract

Based on three in-depth, qualitative case studies on persistent noncompliance with anti-money laundering regulations by major European financial firms over a 15-year period (2005-2020), we investigate why organizations continue to engage in misconduct despite being repeatedly scrutinized by regulatory authorities. We develop a grounded process model that explains the escalating contestation between offending firms and regulatory authorities. Our social-control agent perspective explains this process in detail by clarifying the shifts in regulators’ attitudes towards misconduct over time. We elucidate three episodes of contested interaction between firms and regulatory authorities: regulatory framing, confronting complacency, and coercing acquiescence. We found that within these episodes, learning in response to regulatory enforcement was respectively perverse, myopic and involuntary. More specifically, we find that noncompliance becomes normalized as a result of regulatory restraint, purposefully maintained through symbolic and isolated remediation, and eventually resolved following salient critical events.
Original languageEnglish
Number of pages61
Publication statusSubmitted - 2020
Event36th EGOS Colloquium 2020: Organizing for a Sustainable Future: Responsibility, Renewal & Resistance - Universität Hamburg, Hamburg, Germany
Duration: 2 Jul 20204 Jul 2020
Conference number: 36
https://www.wiso.uni-hamburg.de/fachbereich-sozoek/professuren/vogel-rick/egos2020.html

Conference

Conference36th EGOS Colloquium 2020
Abbreviated titleEGOS 2020
CountryGermany
CityHamburg
Period2/07/204/07/20
OtherVirtual Colloquium
Internet address

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