Crime

Why Women Can't Break Corporate Fraud's Glass Ceiling


Why Women Can't Break Corporate Fraud's Glass Ceiling

Photograph by Cade Martin

Give that shifty-eyed female chief executive officer the benefit of the doubt: A study in the current issue of the American Sociological Review finds that only 9 percent of people involved in high-level financial corporate conspiracies are women. The research, which looks at seven years of data from the federal Corporate Fraud Task Force, notes that female criminals also stole less than their male counterparts—more than half made only a trivial amount from their schemes, while one-third of men made more than $1 million. The study’s authors posit that women are excluded from these conspiracy rings because men see them as less criminally competent. “The glass ceiling effect for involvement in corporate corruption is likely as great or greater than the ceiling that keeps women from climbing the corporate ladder,” says lead author Darrell Steffensmeier, a professor of sociology and criminology at Pennsylvania State University.

But when it comes to lower-level corporate crime, which is often committed by individual bookkeepers, bank tellers, and accountants rather than groups, women make up about 45 percent of culprits, according to a 2012 survey of nearly 1,400 global fraud cases from the Association of Certified Fraud Examiners (ACFE). This summer, for example, a woman was accused of stealing $17,000 by forging her company president’s signature on checks; the leader of a health-care clinic was sentenced to 47 months in prison for stealing $7 million from her corporation; and three female business owners were charged with defrauding Medicaid out of $27,000 by billing for services never performed. And that was just in Florida.

According to John Warren, the vice president and general counsel of the ACFE, there are parallels between these quotidian crooks and those involved in Enron-like conspiracies. At all levels of crime, women profit less than men—a female CEO will steal less than a male CEO, a female middle manager will steal less than her counterpart, and so on down the organizational chart.

“In general, when women in our study were committing fraud, they tended to do it for immediate financial need,” Warren says. Maybe they were going through a messy divorce or had to cover large health-care bills—whatever the reason, he says, these women tapered their embezzling once their needs were met. Thus their net gain would be less than that of the typical male fraudster, who might continue his criminal activity for a longer period.

Women are also, on average, more risk-averse than men. For male thieves, “one of the characteristics … was that the perp was known to have a ‘wheeler-dealer attitude,’ ” Warren explains. Even before they were accused of a crime, their colleagues observed that they were aggressive in dealmaking and good at schmoozing. About 20 percent of male embezzlers were wheeler-dealers, while only about 5 percent of female embezzlers fit that description.

As the authors of the American Sociological Review study put it, women are socialized “to an ethic of care,” which means they’re less likely to engage in behaviors that hurt others. But as that changes (consider a recent headline in the New York Times’ parenting blog: “I Do Not Want My Daughter to Be ‘Nice’ ”), perhaps we’ll see more women in the C-suite—and in the clink. “Everyone is greedy,” Warren says, “and everyone wants a raise.”

Grose is a Bloomberg Businessweek contributor.

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