Fraud and nancial scandals
The chapter illustrates the benets of using business history to gain perspective on a signi- cant problem for present day business and regulators: the continuing occurrence of nancial fraud and nancial scandals. To do so, it presents a conceptual framework of nancial fraud based on the historical interaction of opportunity and impediment. In the long run, the character of opportunity is determined by the technical characteristics of assets and their unique, unknowable or unveriable features. Impediment is promoted by consensus about the real value of assets, such that through active governance processes, fraudulent deviations from real, or consensus value, can be easily monitored. Active governance requires individuals in positions of responsibility to exercise a duty of care beyond merely being honest themselves. Taking a long run historical perspective and reviewing a selection of British nancial frauds and scandals, from the South Sea Bubble to the global nancial crisis, the chapter notes the periodic occurrence of waves of opportunity and the evolutionary response of passive governance mechanisms. In doing so, it provides an overview of the business history and related literatures that have addressed this recurrent ‘dark side’ of business behaviour.