Work-from-home and the risk of securities misconduct

Cumming, Douglas; Firth, Chris; Gathergood, John; Stewart, Neil

Abstract

In the wake of the global pandemic, a challenge for CEOs and boards is to set a stakeholder-acceptable organizational balance between remote and traditional office working. However, the risks of work-from-home are not yet fully understood. We describe competing theories that predict the effect on misconduct of a corporate shift to work-from-home. Using internal bank data on securities traders we exploit lockdown variation induced by emergency regulation of the Covid-19 pandemic. Our difference-in-differences analysis reveals that working from home lowers the likelihood of securities misconduct; ultimately those working from home exhibit fewer misconduct alerts. The economic significance of these changes is large. Our study makes an important step toward understanding the link between the balance of work locations and the risk that comes with this tradeoff.

Citation

Cumming, D., Firth, C., Gathergood, J., & Stewart, N. (2023). Work-from-home and the risk of securities misconduct. European Financial Management, Article 12426. https://doi.org/10.1111/eufm.12426

• Journal Article Type: Article
• Acceptance Date: Apr 17, 2023
• Online Publication Date: May 6, 2023
• Publication Date: May 6, 2023
• Deposit Date: May 12, 2023
• Publicly Available Date: May 12, 2023
• Journal: European Financial Management
• Print ISSN: 1354-7798
• Electronic ISSN: 1468-036X
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Article Number: 12426
• DOI: https://doi.org/10.1111/eufm.12426
• Keywords: Fraud; risk management; securities misconduct; surveillance; work-from-home
• Public URL: https://nottingham-repository.worktribe.com/output/20565987
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1111/eufm.12426