Corporate structure shields executives by diffusing responsibility

Evidence

In “deferred prosecution” and “nonprosecution” settlements corporations are treated as the agents of wrongdoing and fined for criminal behavior. High-echelon officials are granted immunity buttressed by diffused responsibility and deniability built into the corporate structure itself. With little chance of convicting high officials under these self-protective conditions, prosecutors opt for civil settlements of criminal conduct. … An agentless, corporate model has evolved in the banking industry. … Transgressing corporations shield their upper-echelon executives from accountability for their harmful practices and pay fines without having to admit wrongdoing. They receive taxpayer bailouts for financial losses and turn financial penalties into tax benefits by writing off fines as business expenses. … They do so with the tacit consent of lawmakers who depend heavily on corporate funding of their political campaigns. This set of exonerations makes it easy to strip morality from harmful practices. With faulty corporate practices disconnected from adverse consequences for wrongdoers, the free-market system loses its corrective influence. — Albert Bandura, Moral Disengagement, 1605 (#expands, via linked claim)

There are several reasons that prosecutors may be reluctant to go after the corporate upper echelon. The assemblage of corporate legal power is highly intimidating. If deniability for profitable transgressive practices is built into the corporate governance structure of a company, top executives can easily absolve themselves of responsibility. Federal officials justify their reluctance to prosecute the top management of prominent banks by pointing out that it could set in motion events that cripple the economy. — Albert Bandura, Moral Disengagement, 1502 (#corroborates, via linked claim)

Categorization

• XREF: connects to: Stock-based executive pay widened CEO-worker income gaps. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 56; Corporate vices are engendered by structure, not by individuals — Mark Fisher, Capitalist Realism: Is There No…, 142; Corporate structure deadens and subsumes hopeful individual managers — Mark Fisher, Capitalist Realism: Is There No…, 144 (+13 more)

Broader Connections

• Structural diffusion of responsibility in corporations shields executives and strips morality from harm #expands (0.95) — Albert Bandura, Moral Disengagement, 1605
• Structured deniability lets top executives escape liability for corporate crimes #corroborates (0.92) — Albert Bandura, Moral Disengagement, 1502