Growing Fortune 500 firms much more likely to commit financial fraud than smaller struggling companies major study shows

Expanding Fortune 500 firms with spiking growth are more likely to commit financial fraud than smaller companies, according to a recent study published in Justice Quarterly.

Researchers from Washington State University, Pennsylvania State University, and Miami University studied more than 250 U.S. public corporations that were involved in financial securities fraud identified in Securities and Exchange Commission filings from 2005-2013.  The findings clearly showed that prestigious companies with household names were far more likely  to engage in financial fraud. Financial securities fraud involves attempts to manipulate financial markets in a business’ favor by using faulty accounting practices, providing false or incomplete information or otherwise misrepresenting the company’s financial status.

Researchers found that companies with Fortune 500 status were represented nearly four times as often among the firms that had committed fraud than in the nonfraudulent control group. Likewise, firms that traded on NYSE were over-represented among fraudulent firms versus non-fraud – by nearly two to one, a higher rate than those that trade on other exchanges like the NASDAQ or OTC.

The study also revealed that fraud occurred more often in firms where the CEO was also the chair of the board, a potential connection that Schwartz and her colleagues are investigating further.

Jeffrey Newman represents SEC whistleblowers reporting financial fraud nationwide. He can be reached at or 978=880-4758