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Uncovering performance incentives that can lead to corporate fraud

Eric Feldman (efeldman@affiliatedmonitors.com) is Senior Vice President and Managing Director of Corporate Ethics and Compliance Programs at Affiliated Monitors Inc. in Redondo Beach, California, USA.

This is the second of a two-part series examining performance incentives and their link to corporate fraud.

Last month, in the first part of this series, I looked at how many highly publicized corporate frauds and ethical failures were driven by unanticipated consequences of poorly designed and ill-conceived performance incentives as a key contributor to bad employee behavior and corporate fraud. This month, I continue my exploration of perverse incentives and how they can unintentionally lead to corporate fraud and reputational harm for an organization.

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