This study investigates the nature and magnitude of abuse in the Paycheck Protection Program (PPP or the Program) using PPP loans made to 2999 investment advisory firms registered with the U.S. Securities and Exchange Commission (SEC). The data suggest that PPP abuse was relatively widespread as approximately 25% of firms receiving PPP loans indicated they would retain more jobs in their loan application than the number of employees they disclosed on their most recent regulatory filing (Form ADV). We show an existing model of investment advisor fraud predicts the most egregious PPP loans at a rate similar to actual cases of fraud. Investment advisors abusing the Program were significantly more likely to disclose a history of past fraud and other legal and/or regulatory misconduct. Using a conservative approach, we estimate that more than 6% of the $590 million in PPP funds received by SEC registered investment advisors consisted of overallocations to firms abusing the Program. We test a variety of hypotheses to shed further light on the nature of PPP abuse

Financial services misconduct is a concern for many stakeholders and deferred variable remuneration has been proposed as an antidote. The implications for attracting/retaining productive individuals are unknown. This study investigates deferred payment mechanisms through experiments in student and professional samples, taking account of self-selection effects. We confirm that the introduction of deferrals would reduce misconduct through better monitoring. While some individuals eschew deferred payment, even in the presence of a deferral premium, productive individuals are under-represented in this group. Productive individuals are more likely to select deferred variable remuneration, so productivity outcomes are equal to or superior to alternative treatments

This study shows how professional ties assist directors in gaining future board positions when their reputation is tainted by accounting fraud. We demonstrate that the influence of professional ties is more prominent for directors who are more heavily impacted by fraud. This effect is also stronger when directors share professional ties with key board members in the appointing firms. Additional tests show that appointments of these directors are associated with more favorable market reactions compared to appointments of other tainted directors. We also find that firms’ financial reporting quality improves after appointing professionally connected tainted directors