Bankruptcy and criminality

The study examines two issues related to bankruptcy and criminality. The first one is whether statutory audits reduce economic criminality by failing firms.

We use a large sample of small bankrupt firms prior to and after the abolishment of the statutory audit for small companies in 2010 to examine whether there is a causal association between abolished statutory audits and criminality. We examine various crimes (e.g., missing book-keeping, fraudulent conveyances and tax-related).

Our research will also result in a research synthesis of the literature related to the advantages and disadvantages with high (and low) size-thresholds for statutory audits.The second issue examined in the research is how common it is that entrepreneurs abuse bankruptcy by leaving debt unpaid and start a new business in the same industry after a bankruptcy.

The study examines the phenomena from several perspectives, for example, whether those entrepreneurs are associated with more criminality and whether the bankruptcy is associated with a smaller jump in income than for other entrepreneurs going bankrupt.

The research will also result in a research synthesis examining issues related to abuses of bankruptcies.The research group includes researchers with a background in law, finance and accounting.