The Journal of Business, Entrepreneurship & the Law Volume 8 Issue 2 Article 1 5-15-2015 “Because That's Where the Money Is”: A Theory of Corporate Legal Compliance William C. Bradford Follow this and additional works at: https://digitalcommons.pepperdine.edu/jbel Part of the Business Organizations Law Commons, and the Law and Psychology Commons Recommended Citation William C. Bradford, “Because That's Where the Money Is”: A Theory of Corporate Legal Compliance, 8 J. Bus. Entrepreneurship & L. 337 (2015) Available at: https://digitalcommons.pepperdine.edu/jbel/vol8/iss2/1 This Article is brought to you for free and open access by the Caruso School of Law at Pepperdine Digital Commons. It has been accepted for inclusion in The Journal of Business, Entrepreneurship & the Law by an authorized editor of Pepperdine Digital Commons. For more information, please contact [email protected], [email protected], [email protected]. “BECAUSE THAT’S WHERE THE MONEY IS”: A THEORY OF CORPORATE LEGAL COMPLIANCE WILLIAM C. BRADFORD I. Introduction .................................................................................................... 341 II. Toward a Theory of CLC ............................................................................. 345 A. Personality Theory ........................................................................... 345 1. General Premises and Assumptions .......................................... 345 2. Personality Constructs ............................................................... 346 a. Beliefs ................................................................................. 346 b. Images ................................................................................. 347 c. Values ................................................................................. 348 d. Attitudes .............................................................................. 348 e. Traits ................................................................................... 348 f. Motives ................................................................................ 348 g. Summary ............................................................................. 348 3. Measuring Personality ............................................................... 349 4. Conditionality and Contingency: Other Levels of Analysis ..... 350 B. A Theory of CLC ............................................................................. 351 1. Introduction ............................................................................... 351 2. Independent Variables: Personality Constructs ........................ 351 a. Militarism ............................................................................ 351 i. Sub-constructs of Militarism ........................................ 352 ii. Summary and Operationalization: Militarism ............. 354 b. Anomism ............................................................................. 354 i. Disregard for Law ........................................................ 354 ii. Disregard for Legal Authorities .................................. 355 iii. Amoralism .................................................................. 355 iv. Ignorance of Law ........................................................ 355 v. Ignorance of Corporate Law ........................................ 356 vi. Summary and Operationalization: Anomism ............. 356 c. Hostility ............................................................................... 356 i. Distrust ......................................................................... 356 ii. Narcissism ................................................................... 357 iii. Cynicism .................................................................... 357 338 BUSINESS, ENTREPRENEURSHIP, & THE LAW Vol. VIII:II iv. Misanthropy ................................................................ 358 v. Ethnocentrism .............................................................. 358 vi. Hostility ...................................................................... 358 vii. Machiavellianism ...................................................... 359 viii. Lack of Empathy ...................................................... 359 ix. Selfishness .................................................................. 359 x. Summary and Operationalization: Hostility ................ 359 d. Adventurism ....................................................................... 360 i. Tolerance of Risk ......................................................... 360 ii. Internal Locus of Control ............................................ 360 iii. Impulsivity ................................................................. 360 iv. Anxiety ....................................................................... 361 v. Optimism ..................................................................... 361 vi. Stress .......................................................................... 361 vii. Male Sex .................................................................... 361 viii. Summary and Operationalization: Adventurism ...... 361 3. Dependent Variables: Decisions and Outcomes Regarding CLC ......................................................................................... 362 a. Introduction: Corporate Law and Major Sub-regimes ........ 362 b. Operationalization ............................................................... 365 c. Preliminary Hypotheses and Associative Linkages ............ 366 III. Personality and CLC: Heuristic Testing of the Theory ............................... 366 A. Data .................................................................................................. 366 1. Enron ......................................................................................... 367 a. CEO Jeffrey Skilling ........................................................... 367 i. IVs: Scores on Personality Constructs ......................... 367 a. Militarism ............................................................. 367 b. Anomism .............................................................. 369 c. Hostility ................................................................ 371 d. Adventurism ......................................................... 372 e. Summary of Independent Variables: Jeffrey Skilling ..................................................................... 373 ii. DVs: CLC and Enron ......................................................... 373 2. WorldCom ................................................................................. 376 a. CEO Bernard Ebbers ........................................................... 376 i. IVs: Scores on Personality Constructs ......................... 376 a. Militarism ............................................................. 376 b. Anomism .............................................................. 377 c. Hostility ................................................................ 378 d. Adventurism ......................................................... 379 e. Summary of Independent Variables: Bernard Ebbers ....................................................................... 379 2014 A THEORY OF CORPORATE LEGAL COMPLIANCE 339 ii. DVs: CLC and WorldCom .......................................... 380 3. ImClone Systems ...................................................................... 382 a. CEO Sam Waksal ............................................................... 382 i. IVs: Scores on Personality Constructs ......................... 382 a. Militarism ............................................................. 382 b. Anomism .............................................................. 383 c. Hostility ................................................................ 384 d. Adventurism ......................................................... 385 e. Summary of IVs: Sam Waksal ............................. 386 ii. DVs: CLC and ImClone Systems ................................ 386 4. AIG ............................................................................................ 390 a. CEO Hank Greenberg ......................................................... 390 i. IVs: Scores on Personality Constructs ......................... 390 a. Militarism ............................................................. 390 b. Anomism .............................................................. 391 c. Hostility ................................................................ 392 d. Adventurism ......................................................... 393 e. Summary of IVs: Hank Greenberg ....................... 393 ii. DVs: CLC and AIG ..................................................... 394 5. HealthSouth ............................................................................... 396 a. CEO Richard Scrushy ......................................................... 396 i. IVs: Scores on Personality Constructs ......................... 396 a. Militarism ............................................................. 396 b. Anomism .............................................................. 398 c. Hostility ................................................................ 399 d. Adventurism ......................................................... 400 e. Summary of IVs: Richard Scrushy ....................... 401 ii. DVs: CLC and HealthSouth ........................................ 401 6. Sunbeam ...................................................................................